FMG - Fortescue Ltd

[skyQuake]

The news came out after the spike. I was just lucky to be there.

DJ Market talk had some info at 2:50, Reuters possibly eariler.

China's sovereign wealth fund CIC and Fortescue Metals
(FMG.AU) may be closer to a funding deal with Reuters reporting the two are in advanced
talks on a $1 billion plus package for the miner's planned expansion of its iron ore
operations in the Pilbara region of Western Australia. Citing sources familiar with the
matter, Reuters says talks center on $1 billion-plus convertible bond deal. Fortescue
said in February it was in talks with CIC on possible hybrid funding package to underpin
its expansion. Latest report indicates a deal is moving closer. Fortescue declined to
comment; said it holds talks with a range of parties on a range of matters. CIC also
declined to comment. Fortescue shares climbed on the report and are up 2.6% at A$4.25.
(APW)

Edit: Bought at 4 for a scalp. Volume and price spike this morning, and the long tail candle meant selling from y'day announcement was prob over. Mostly luck on this trade.

 

[Dark1975]

The news came out after the spike. I was just lucky to be there.

DJ Market talk had some info at 2:50, Reuters possibly eariler.



Edit: Bought at 4 for a scalp. Volume and price spike this morning, and the long tail candle meant selling from y'day announcement was prob over. Mostly luck on this trade.

Arh cheers for the information.Dam i sold to early,still made 2% on this trade for today,I was following my trading plan,I just thought to myself why didn't i just hold on for one more hour!Anyway im just being greedy,pay no attention to me.
Nice work again on your hold and trade for today.

 

[fureien]

yeh thanks for that and nice work. but that announcement isnt very substantial for a spike, but i believe movement is mostly from recovery from yesterday. so yeh mostly luck gw nevertheless. have u sold it yet or are u still holding

 

[DVEOUS]

Thanks for the info.
That explains the late bullish run.

To think I was sitting here on my big fat A watching it hover $3.99-$4.01 this morning... and wondering if I should accumulate more... or whether it had further to fall.

I knew I should have jumped in at $4.

You need balls of steel.

 

[DVEOUS]

OK, this is what Business Speculator have to say about it;

http://www.businessspectator.com.au/bs.nsf/Article/UPDATE-1-CIC-in-talks-with-Fortescue-on-1-bln-conv-UT8DL

 

[LeeTV]

11 iron ore "winners"
Robin Bromby | August 12, 2009
Article from: The Australian
http://www.theaustralian.news.com.au/business/story/0,28124,25918554-36418,00.html

TAKE the possible 21 iron ore stocks - outside the two Pilbara majors, of course - and Petra Capita of Sydney has found 11 they can recommend as value buys.

The broker tried to make it a level playing field - comparing apples with apples, if you like - by converting magnetite resources to their haematite equivalent; they did the sums on the amount of beneficiation required to produce a concentrate. Current benchmark iron ore prices were used to calculate enterprise value and that was all mixed up with expected EDITDA for the companies concerned.

Then they were handicapped into three divisions by market cap - one above and two below the $500 million threshold.

Four got the big tick in the heavyweight category: Murchison Metals with its Jack Hills project in the Mid West region of Western Australia; Gindalbie Metals which is also in that region with its Mungada and Karara projects; Fortescue Metals Group, the “new force” in the Pilbara; and Mount Gibson Iron which has Tallering Peak, Koolan Island and Extension Hill.

Middleweight contenders that got the nod from Petra Capital were Brockman Resources with its Pilbara iron ore deposit, Sundance Resources toiling away in tropical Cameroon, Northern Iron - a surprise winner - with the Sydvaranger deposit in Norway and - back to the Pilbara - United Minerals Corp.

In the lightweight division, there’s Western Plains Resources drilling away in the South Australia at Peculiar Knob and Buzzard, Strike Resources over there in Peru, BC Iron which has kneeled at the foot of FMG in return for access to the latter’s Pilbara railway and as a consdequence will be in production next year, and Flinders Mines and its Hamersley project. In regard the last mentioned, FMS yesterday received a speeding ticket from the ASX, the company responding that the price and volume surge may have been due to a new broker’s report.

It was interesting to see which companies got taken out in the cull. Notably there was Atlas Iron which is one of the great Pilbara junior success stories - but remember, this was all about finding stocks that are still value buys, not ones whose achievements and prospects have already been factored into their price.


The writer implies no investment recommendation and this report contains material that is speculative in nature. Investors should seek professional investment advice.

 

[DVEOUS]

Well, today's announcement by FMG didn't confirm they were in talks with anyone specific, but it certainly didn't deny it wasn't in talks!
Seems like the Reuters report yesterday was credible.

Assuming that FMG do achieve 95MTpA, and given that BHP is what, 125MTpA and SP ~$37, would it not be reasonable to expect that FMG could end up being ~$30 in 2 years or so.
Bear in mind they were $12-$13 before the GFC.

 

[fureien]

either way u need to have balls atm to speculatively buy in. esp since theres no official announcement or indication of anything. They didnt indicate a timeframe did they? otherwise just camp out everymorning and pound the refresh button for news announcements lol

2 years is a loooong time

 

[skyQuake]

Well, today's announcement by FMG didn't confirm they were in talks with anyone specific, but it certainly didn't deny it wasn't in talks!
Seems like the Reuters report yesterday was credible.

Assuming that FMG do achieve 95MTpA, and given that BHP is what, 125MTpA and SP ~$37, would it not be reasonable to expect that FMG could end up being ~$30 in 2 years or so.
Bear in mind they were $12-$13 before the GFC.

You are ignoring BHP's market cap.... You cant compare share price with share price.

BHP also has oil nickel uranium alum copper gold silver lead assets etc.

 

[DVEOUS]

...They didnt indicate a timeframe did they?

By 2012.

You are ignoring BHP's market cap.... You cant compare share price with share price.

BHP also has oil nickel uranium alum copper gold silver lead assets etc.

Yes, good points skyQuake, but no matter what they're digging up, profit is profit. I wouldn't say that 3 x annual output is 3x profit, but it must add to the bottom line in a significant way? Especially when you have your own rail and port infrastructure.

Factoring everything in, would you care to guestimate what the potential SP might reach, assuming the 95mta, no further GFC ramifications, etc?

(I already hold FMG, and are in for the medium term)

 

[Surly]

Well, today's announcement by FMG didn't confirm they were in talks with anyone specific, but it certainly didn't deny it wasn't in talks!
Seems like the Reuters report yesterday was credible.

Assuming that FMG do achieve 95MTpA, and given that BHP is what, 125MTpA and SP ~$37, would it not be reasonable to expect that FMG could end up being ~$30 in 2 years or so.
Bear in mind they were $12-$13 before the GFC.

I think it is fairly reasonable to say that FMG have performed very poorly in reaching production targets and dates.

The original engineering and construction crew were called Team 45 as in 45Mtpa. They still arent there let alone any further along.

cheers
Surly

 

[DVEOUS]

...The original engineering and construction crew were called Team 45 as in 45Mtpa. They still arent there let alone any further along.

Having just gotten onboard back in May, I didn't know that, so thanks for the heads up.

I then found this article http://www.sharecafe.com.au/fnarena_news.asp?a=AV&ai=5398 from just over 2 years ago which explains the Team 45 business.
It seems JP Morgan were very bullish with FMG at the time, and were forecasting 100Mtpa for 2012 back then!

 

[fureien]

lol is this the fabled chinese deal that skyqauke posted about? if it is likely to see some nice movements

 

[Dark1975]

lol is this the fabled chinese deal that skyqauke posted about? if it is likely to see some nice movements

Agreed,I did look up that thread from sky,And personally thought the deal wouldn't take place for a few weeks. Im now smashing my head as the emo suggests

 

[DVEOUS]

lol is this the fabled chinese deal that skyqauke posted about? if it is likely to see some nice movements

Let's see who is laughing next Monday!

TRADING HALT

"Fortescue Metals Group Ltd, Australia's third biggest iron ore miner, has asked for trading of its shares to be halted as it completes an undisclosed commercial negotiation..."

http://www.businessspectator.com.au/bs.nsf/Article/Fortescue-share-in-a-trading-halt-pd20090813-UV7QF


I think I'll give myself an uppercut for not accumulating more at $4 on Tuesday.

Ohh well, feet up until Monday fellow FMGers.

 

[LeeTV]

China mulls $1bn boost for Fortescue
Tuesday August 11, 2009 21:21:06 EDT
Aug 11, 2009 (The Australian - ABIX via COMTEX News Network) -- Chinese Government entities are scaling back their ambitions for investment in Australia due to regulatory concerns. They are now pursuing joint ventures and funding deals rather than complete takeover bids. The latest proposal is for sovereign wealth fund China Investment Corporation to take on $A1bn worth of convertible bonds issued by iron ore miner Fortescue Metals Group. However, Yanzhou Coal still aims to acquire all of Felix Resources, for up to $A3.3bn.

http://au.quote.com/news/story.action?id=ABX223i3214

This seems to be the culprit eh?

 

[LeeTV]

Fortescue and Exim nutting out lucrative deal

Matt Chambers | August 15, 2009

Article from: The Australian

ANDREW Forrest's Fortescue Metals Group is believed to be in advanced talks with major policy bank Export-Import Bank of China (Exim Bank) over a multi-billion-dollar deal to finance expansion of its Pilbara iron ore mines.

Financing is being discussed along with a potential price negotiation that would give Fortescue certainty to meet repayments.

Contrary to previous speculation, sovereign wealth fund China Investment Corp is not one of the parties involved in the deal and the issue of a convertible bond is not being discussed.

In line with Mr Forrest's stated reluctance to further dilute shares, financing is not expected to contain an equity component. Fortescue shares were placed in a trading halt on Thursday, pending the expected completion of a commercial negotiation to be announced on Monday.

It is believed talks to nut out the final details of the agreement are scheduled to extend over the weekend.

Since the beginning of the year, Fortescue has held talks with Exim and CIC, among others, to finance a jump in production from its current plan of 45million tonnes a year to 120m tonnes.

Last week, it downgraded its ambition to 95m tonnes a year.

Some analysts have speculated that China is keen to see Fortescue increase production to provide a sizeable Australian competitor to BHP Billiton and Rio Tinto's planned iron ore merger, which would create a giant with more than 300m tonnes a year combined annual production.

Before Rio rejected Chinese aluminium giant Chinalco's $US19.5billion rescue package in May, China Exim Bank had offered the mining giant an unlimited line of credit, potentially worth $20bn, at attractive rates.

Any price agreement would be new territory for Fortescue, which has previously said it was a price taker.

A fraught round of price talks this year has seen it extend longer than ever before, as China has refused to fall in line with a 33 per cent discount settled on iron ore fines by Japanese, Korean and Taiwanese steel makers.

That deal now looks increasingly attractive for steel makers as spot prices are rising back to the levels of 2009 contract prices.

 

[LeeTV]

Fortescue Metals Group

Pilbara iron ore miner Fortescue Metals Group has entered a halt pending "an expected release on Monday regarding the completion of a commercial negotiation". Speculation that the company is set to sign a $US1 billion convertible note issue with China Investment Corporation is no doubt foremost in investors' minds, but Alex Passmore from Patersons Securities wrote in a note to clients that Fortescue would usually say "funding negotiations", not "commercial negotiations" if it were the case. Fortescue's current halt could thus have little to do with the company's earlier response to such speculation: that its present funding negotiations were incomplete. Passmore said that pending commercial negotiations otherwise include Fortescue’s current shipping dispute, potential investment for the Solomon or Glacier Valley magnetite projects, provisional iron ore price setting and infrastructure sharing arrangements. Updates on any or all of these issues will no doubt be welcomed but the CIC deal – if it happens – could still be a little while off.

http://www.businessspectator.com.au...s-catch-pd20090814-UVTKY?OpenDocument&src=sph

 

[skyQuake]

ADRs closed at $4.91 lol, some buying at the close.
Stupid how its halted here but not in the US..
.

 

[LeeTV]

FORTESCUE ACHIEVES CHINA IRON ORE PRICE
AND TOTAL VOLUME AGREEMENT FOR 2009
Perth 17 August 2009: Fortescue Metals Group Ltd (“Fortescue”
“ASX”:”FMG”) has achieved a landmark agreement with Baosteel Group
Corporation (Baosteel) and China Iron and Steel Association (CISA) for an
agreed China price for all Fortescue iron ore sold to Chinese mills for the period
July 1 to December 31, 2009.
The agreement, signed by Baosteel and CISA, commits Chinese steel mills to
acquire approximately 20 million wet metric tonnes from Fortescue for the
period between 1 July and 31 December 2009.
The agreed price is US$0.94 / dry metric tonne unit (“dmtu”) for Fortescue’s
Rocket Fines (on an FOB basis) and is around 3% under the price agreed by
other Australian producers with non Chinese Steel mills. This price equates to
approximately US$55.50 per dry tonne for Fortescue grade iron ore. Fortescue
has also agreed a lump price of US$1.00/dmtu for high grade lump which is
equivalent to approximately US$61 per dry tonne FOB.
A condition subsequent to this agreement is the completion of finance by 30
September 2009, by Chinese financiers on terms acceptable to Fortescue. This
is estimated by Fortescue to be an amount of US$5.5 billion to US$6 billion.
Under the Agreement, CISA has guaranteed that a priority will be given to FMG
to negotiate iron ore prices for 2010 if the annual pricing negotiation is
conducted.
Fortescue Chief Executive Officer, Mr Andrew Forrest, said the agreement
breaks the market impasse which has enveloped the Chinese iron ore industry
in uncertainty and added risk for the past 12 months.
“This groundbreaking agreement cements the strength of the bilateral
relationship between Australia and China in which mutual issues can be
resolved and future opportunities identified. It also creates a realistic and
agreed iron ore price that delivers value for all parties and provides strong
support for Fortescue’s continued growth” Mr Forrest said.
“The ongoing market speculation has promoted unprecedented iron ore and
steel price volatility, which in turn has created extreme production uncertainties
for Chinese steel mills and for suppliers setting individual contracts with those
mills.

“This agreement eliminates that price uncertainty, sets a solid platform for
Fortescue to deliver increased product into China and affirms our close working
relationship with CISA and all Chinese steel mills.”
Fortescue notes that while the price of steel in China has nearly doubled over
the past three months, it has fallen by 20% over the past 10 days alone,
reflecting the continued volatility in the industry.
“This agreement highlights Fortescue’s extraordinary achievement of becoming,
in only our first year of production, a critical element in the Chinese steel market
and guarantees our short to medium term tonnage volumes and underpins cash
flows irrespective of market volatiity,” Mr Forrest said.