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FMG - FORTESCUE METALS GROUP LTD


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HIGHLIGHTS

 

Fortescue's shipping and mining volumes exceeded fourth quarter and full year forecasts.

 

Direct costs for the June quarter were 36% lower than the previous period.

 

The strong June quarter results firmly embedded the positive trends which were evident but rain impaired in the March quarter.

 

Port and rail infrastructure surpassed many design capabilities.

 

Valin's equity investment was completed following the receipt of $644.8 million for the allotment of 260 million shares to Valin.

 

A number of KPI records were achieved during the June quarter:

 

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ 129,008 tonnes processed through the ore processing facility (OPF) in one day;

 

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ 100,349 tonnes loaded onto a ship within one 12 hour shift;

 

ÃÆâ€â„¢ÃƒÆ’ƒâہ¡ÃƒÆ’‚¢ÃƒÆ’¢Ã¢Ã¢Ã¢Ã¢â€š¬Ã…¡Ãƒâ€šÃ‚¬ÃƒÆ’…¡Ãƒâہ¡ÃƒÆ’‚¬ÃƒÆ’â€Å¡Ãƒƒâہ¡ÃƒÆ’‚¢ 757,290 tonnes railed over a seven day period.

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FMG close to a breakout---$4.40 first target.

 

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  • 3 weeks later...

Atlas Iron predicting some consolidation of companies in the Pilbara, and saying it will continue to support FMG's efforts to open up BHP/RIO rail and port infrastructure to alternative parties . BHP stating that IO sales to China are strong and stable .

 

FMG reserve upgrade by 1 Billion tonnes last week . PE of 4 with eps over $1 . Chart looks like it is itching to run imo .

 

I personally feel that FMG is going so well with production, reserve increases and corporate dealings, and by remaining a constant thorn in the side of BHP/RIO someone will have a crack at FMG soon .

 

 

 

 

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"..... Rumors are also swarming China Investment Corp (CIC), the country's $200 billion sovereign wealth fund, is eyeing a financing deal with Fortescue Metals, Australia's third largest iron ore miner.

 

What is more, Fortescue's boss Andrew Forrest is expected to ultimately sell his firm sometime in the near future -- even after Fortescue struck a $438 million stake deal with China's Hunan Valin Iron and Steel Group earlier this year.

 

"I think that Andrew Forrest is definitely a seller," one Hong Kong-based banker with knowledge of the Fortescue-Hunan Valin deal said, adding that Forrest may prefer to develop the company more before he exits at a higher price.

 

The banker predicted that Chinese firms, including Hunan Valin Iron and Steel, could be interested in buying Fortescue.

 

Both bankers declined to be named to protect client sensitivities ....."

 

http://www.ibtimes.com/articles/20090805/c...r-oz-miners.htm

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"SYDNEY/HONG KONG, Aug 11 (Reuters) - Fortescue Metals (FMG.AX) and China Investment Corp (CIC), China's $200 billion sovereign wealth fund, are in advanced talks on a $1 billion-plus convertible bond deal to help the iron ore miner fund expansion, two sources familiar with the deal said on Tuesday."
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  • 4 weeks later...

Fortescue's Need For Capital The Major Negative

Earlier this week FNArena noted Credit Suisse initiated coverage on Fortescue Metals (FMG) with an Underperform rating (see More Coverage, Another Sell On Fortescue ), joining the majority of analysts in the market with a negative view on the stock.

As Morgan Stanley points out in a note on the stock today, there is a good reason the FNArena database shows a total of seven Sells compared to one Hold rating and that is the company is likely to require additional capital sometime in the coming year and this raising will be dilutive to existing shareholders.

The broker points out the group's accounts show financial liabilities maturing in the next six months of US$554 million and in the following six months of US$178 million, meaning a total of US$732 million maturing in FY10. Offsetting this is US$655 million cash on hand, though this is before an estimated US$140 million in capex requirements during what it expected to be a break-even result in terms of cash from operations.

When currently unpaid Leucadia royalty payments of US$71 million are added in, along with the broker's expectation long lead time items related to phase two expansions previously ordered could be delivered this year, it sees scope for the company's capital requirements to rise significantly. Further support to its view comes from the fact when the company ships its 100 millionth tonne of iron ore it is required to detail a proposal to build an iron agglomeration plant, and on shipping its 150 millionth tonne it is required to have the plant running within three years, which the broker suggests shows a clear need for new capital, which would account for the US$6 billion the company is currently attempting to secure from Chinese backers.

In Morgan Stanley's view, even if the raising were to take the form of hybrid securities, such securities would ultimately be converted into equity and so would be dilutive to existing shareholders, particularly as any deal appears to be exclusive to the Chinese backers and not available to existing shareholders. Credit Suisse offered a similar argument earlier in the week, noting while higher production and higher iron ore prices are potential positives for earnings the group's highly geared capital structure is a major concern. Similarly Deutsche Bank suggested while the capital raising would help address cash flow issues the stock remains expensive relative to its valuation, while RBS Australia offered a similar argument. Morgan Stanley expects an announcement on a capital raising by the end of this month and given this it retains its Underweight rating on the stock, with a price target of $2.15. This compares to an average price target according to the FNArena database of $3.10.

http://www.sharecafe.com.au/fnarena_news.a...AV&ai=14186

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