Australian (ASX) Stock Market Forum

FMG - Fortescue Ltd

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Prospector said:
Miner, given your past concerns about FMG, your discussions are very meaningful and encouraging. Their idea about selling infrastructure has to be more positive than going in to further debt.
Click to expand...

I am still skeptical in the short term. FMG need to build the railway in australia first. If BHP and RIO are successful in their merger, their alliance reduce their cost price for a tonne lower than FMG.

I understand FMG has the biggest reserves and high quality but they havent produced yet. If FMG are successful in what they are doing their SP will be much higher than RIO's

Long term, if all goes will this stock will be HUGE..., but until then I am little skeptical
 
spectrumchaser said:
"FMG need to build the railway first"

The FMG railway was 85% completed as of the end of January.
Anyone interested may like to look at photos for the March
update
http://www.fmgl.com.au/IRM/Company/ShowPage.aspx?CPID=1484&PageName=March Update


Perhaps the sceptics will claim that these photos are
computer generated forgeries !
Click to expand...

hmm so thats what you get for $2.7billion
ok I am sold, I think i am the only person in this forum that was skeptical. I will follow the herd.. Mooo

let me have a slice of the pie
 
Miner Re: FMG - Fortescue Metals

--------------------------------------------------------------------------------
Folks
I am not holding any FMG share or paid by Twiggy. I have been always a bit shaky about FMG. However analysing the fundamentals and project progress as released to its own working employees / contractors FMG project is at least fortnight ahead than the projected target. It will nto be 45 mtpa however. The lump circuit will make it to 45 by Sep and rememner desanding is an important part for making the 45 mpta.
Click to expand...

I was just reading the company March Update, and I believe they have only stated that screening has been powered up and that crushing as yet to be complete, it also looked like from the picture that the train loader wasnt completed but thats a seperate issue.

I was wondering were are you getting the fortnight ahead of schedule from, as I'm sure that it was scheduled for First Ore on Train to be as of the date 15th of March. assuming they are a fortnight a head of schedule would this not mean that the screening and crushing has been completed and possibly trainloading. so if possible miner i was wondering if you could share some light on how you are coming up with a fortnight a head of schedule as I do not see this in there public announcement for March.
 
Public announcement is FOOS on May 08. FOOS is important and FOOT (First ore on Train). WHen it is FOOT then the ore will be dumped in port stockpile to be taken in ship. So the slack activity between FOOT and FOOS will be real meaningful.

FMG has an internal target which says that FOOS will be end of April. This is not really a secret. Any one working in team 45 (= 45 mtop) or a contractor like Rourke , BYL, etc will get the same weekly progress target. ASX gets monthly report that too modified after few weeks after release.

Crushing stations are for secondary screening. FMG I understand organising for some mobile crushers to be deployed .

Please one thing rememner that no matter how much tonnes are put into ship in first ship load, FMG is determined to prove that they are on time. Then there could some time buy out opportunity to get it full swing.

The time of commitment is crucial for Twiggy to get share price jumped.

PS : once again I do not work for FMG or Andrew neither I hold any FMG shares.
 
Hi there,
I have also read that only power is up in Screening so how in the world woudl they achieve First Ore on Ship by that date is beyond me?
Does anyone have any other info?

This one is on my watch list... do you guys think sp of FMG will go down a bit somewhat if deadline is not achieved?
 
ans25 said:
Hi there,
I have also read that only power is up in Screening so how in the world woudl they achieve First Ore on Ship by that date is beyond me?
Does anyone have any other info?

This one is on my watch list... do you guys think sp of FMG will go down a bit somewhat if deadline is not achieved?
Click to expand...

Great Pig

My personal belief is FMG having not produced any ore, the share price will zoom down if the dead line is not met. There are so much hype and expectation that Graeme Rowley or Russell of FMG just can not afford to get Andrew loose hundreds of millions from this shocking price down. on a flick of bad news Twiggy will not be the richest person at that juncture. If you know Andrew is very much media focused person and will not let this happen. This is his life more than any one other investor who might have invested only hundreds of thousands.

Ironically BHP escalated project cost by more than $100 M no one raises a finger because they have already proved to be a production company. But FMG is on paper - not yet a production company.

So in short if I punt or apply my own scope then share price will go down around 10% if the target date gets escalated by one week.
 
Interesting point mate, Im guessing then there will be no announcements then made by FMG... no news is good news then huh?
 
Interesting news today as posted in ABC Webpage.
Financially $600K will not matter for people like Andrew which is much less than a fluctuation of 50 cents of his share holding. However for a publicity focused person this will give food for his critics, bad publicity and media.


ASIC begins legal action against FMG
Posted 25 minutes ago 11 MARCH 08

The Australian Securities and Investment Commission (ASIC) alleges FMG failed to comply with continuous disclosure obligations in 2004. (ABC TV)

Map: Perth 6000
The corporate watchdog says it will produce three witnesses in its Federal Court case against Australia's richest man, Andrew Forrest, and his company Fortescue Metals Group (FMG).

The Australian Securities and Investment Commission (ASIC) alleges FMG and Mr Forrest failed to comply with continuous disclosure obligations when announcing contracts with two Chinese companies in 2004.

At the time the company was trying to secure funding for its multi billion dollar iron ore project in the Pilbara.

In the Federal Court in Perth today, Stephen Robb, QC, said ASIC has evidence from three expert witnesses, one of whose statements is 90 pages long.

ASIC is pursuing FMG for civil damages of $3 million and Mr Forrest for $600,000.
 
Nothing like a bit of scandel to add some interest to the Ausi share market.

This case unfortunately doesn't look half as interesting as other Iron ore "mega wealthies" inquest over Lang Hancock complete with hitmen, adultery and black magic!

8% fall for FMG today seems like a lot but BHP and Rio are both down by about 5% as well.

Seems like a long time to put a case together for wrong doings in 2004.
 
REPORT FROM SHAW BROKER// F N ARENA

Further to that there is a press report in West Australian about Russian Interest to buy 20% of FMG when the price is right (who will tell that value)?
Funny as recently CITI said SELL to FMG (Am I right to recollect ?)

Any way here u go
The Iron Ore Surge Continues
14/03/2008 By: FN Arena

Fortescue Metals ((FMG)) will not wait for its railway line form the Pilbara to Port Hedland to be completed. Completion was originally slated for May or earlier, but inevitable delays have set this target back. Instead, Fortescue intends to truck its iron ore to port from the end of the line as it creeps closer. There is no time to lose. (Hey Forum Guys please read my post few days back. I am an idiot and no brainer but did say the same on my own observation . But why I then @#$@ lost so much in recent share market ?):banghead:


There is no time to lose because the iron ore price is running amok, and if Twiggy Forest wants to be able to crystallise his status as Australia's richest man then he needs to start selling into this market as soon as possible. Analysts have now moved ahead to forecast prices for the 2009, 10 and 11 Japanese financial years, expecting further increases in the first two before the iron ore price levels out.

We now know that Brazil's Vale - the world's largest individual producer of iron ore - has settled with the Japanese and Koreans on price increases for Itabira fines of 65%, and of 71% for the higher grade Carajas fines. While these are significant increases, Merrill Lynch analysts are surprised Vale didn't twist arms further. China is currently being forced to buy in lower grade Indian ore at spot for as much as US$216/t. The new Carajas price represents only US$146/t. Chinese buyers will expect to pay the same as their neighbours.

The answer probably lies in the speed with which Vale settled with the Japanese and Koreans, the analysts suggest. Vale is presently attempting to merge with Swiss mining giant Xstrata and needs to settle a deal with Swiss-based metal trader Glencore (Marc Rich's creation) which owns 34.6% of Xstrata. So it was better to sort out the iron ore price with expedience.

Analysts agree that its fair to thus assume BHP Billiton ((BHP)) and Rio Tinto ((RIO)) will negotiate a 65-71% price increase as well. It is understood the two Aussies will be pushing for more, given the Brazil-Australia freight differential. Australia currently receives US$37/t less for its iron ore than Brazil because of an antiquated agreement based on the fact it's a lot further to Asia from Brazil. The differential is no longer justified, so the Aussies are expected to push for a price rise of up to 100%. However, the Asians are likely to stand firm and despite world iron ore supply constraint they can now wave a potential US recession - and a subsequent drop in steel demand - in BHP's and Rio's faces. Negotiations are still underway.

As are negotiations between BHP and Rio, as the former tries to swallow the latter. A BHP Tinto would then become a bigger iron ore producer than Vale and thus in a better position to dictate terms. But that's not going to happen before negotiations are over for the year, if at all.

So analysts believe the two will have to settle on an equivalent price increase this year, but not yet an equivalent price. What happens thereafter will depend on two factors - the supply/demand balance, and the possible introduction of an iron ore index.

It is China driving demand. In 2007, China represented 80% of the growth of iron ore exports from Brazil/Australia, or 46% of the total. Imports were 384mt in 2007, up 17.6% from 2006. Merrill Lynch is forecasting 446mt of imports in 2008. ABN Amro notes Chinese steel production is forecast to maintain its current growth trend, as new capacity additions are only replacing the closure of smaller, inefficient mills. The analysts also suggest the higher costs of both iron ore and coal should be able to be passed on into steel prices, meaning there won't suddenly be a big drop in demand at that end.

On the supply side of the equation, constraint of supply has nothing to do with a lack of ore and everything to do with insufficient infrastructure and spiralling costs. All of Vale, BHP and Rio are planning capacity expansions from next year, with Vale hoping to go from 296Mtpa to 450Mtpa by 2013, BHP from 135Mtpa to 235Mtpa, and Rio from 180Mtpa to 350Mtpa (and don't forget Fortescue's targeted 100Mtpa or greater). But it all requires more equipment, labour, rail and port expansion, and new processing plants. Merrills notes Vale's last expansion cost US$112/t - twice as much as the company's previous expansion.

But another bombshell may soon hit the seaborne iron ore market. Merrills coyly suggests BHP is coercing Chinese steel giant Baosteel to support and help develop a global traded iron ore index. Apparently BHP is no longer writing new individual benchmark contracts and will only renew at an "agreed annual market price". This is seen as a precursor to the index. Iron ore is the only major commodity left without an index.

What this means is that producers and consumers will be able to agree on contract prices across a forward curve. What it also means is that speculators could then enter the market for paper-traded iron ore. To date, an investor wishing to "play" the iron ore market has had to be content with investment in shares of iron ore producers. Create an index, and the next thing you will have is derivatives. The prices of all commodities have surged recently ahead of consumer demand because of the growing popularity of investment in ETFs and other products.

With the JFY08 Australian price increase expected to be 71%, Merrills is now forecasting another 20% price increase in JFY09. The analysts suggest this forecast is "at the top end of consensus", with the current average suggested at 14%. However, GSJB Were is also expecting 20% and Citi recently shifted to as high as 30%. Merrills does, however, suggest its forecast is conservative.

Thereafter, Merrills sees another 10% increase in JFY10 (consensus minus 4%), a flat price in JFY11 (consensus minus 20%), and then falls of 25%, 20% and 20% respectively in JFY12-14. At this point, increased production should see iron ore move into surplus.

The good news is that Merrills believes the share prices of Australian iron ore producers are not yet reflecting such near term increases. Macquarie chimes in by suggesting that despite general global equity market weakness, certain sections of the resources sector continue to offer a safe haven.

(Who are Merrills ? They lost billions and now saying others to learn from them - joke)

This article was kindly supplied by FN Arena. As such, it may not represent the views of egoli or SHAW Stockbroking. egoli and SHAW Stockbroking do not warrant the accuracy of the article and take no responsibility for the views expressed in the article.
 
Good post miner, Andrew Forrest last week said he will shovel the stuff into the ships to meet the May first shippment, thats the kind of attitude I want to hear from any Iron ore company I invest in. Yearly output now eyeing 55mtpa, thats a major target for any iron ore company in Australia, looking at how far FMG has come I believe its a target that can be meet. As for Citigroup, Macquaire Bank etc with their sell, sell BS.....I say no thanks, look at their current SP, billion dollar quarterly loses, Graphs, then look at FMG upward strides, I believe they have missed the boat and have their own agendas when they tag it with a sell, bunch of clowns IMO, I take no notice and trust research and why I got into FMG in the first place....period.

BTW Resource sector is the strongest performing in the old ASX at the moment.
 
I'm sure I read this somewhere, but, weren't they selling the Railway line, Part of the Port, Cloudbreak Campsite etc?

I'm presuming they are ramping up for the next stages
 
Miner said:
REPORT FROM SHAW BROKER// F N ARENA

Further to that there is a press report in West Australian about Russian Interest to buy 20% of FMG when the price is right (who will tell that value)?
Funny as recently CITI said SELL to FMG (Am I right to recollect ?)

Any way here u go
The Iron Ore Surge Continues
14/03/2008 By: FN Arena

Fortescue Metals ((FMG)) will not wait for its railway line form the Pilbara to Port Hedland to be completed. Completion was originally slated for May or earlier, but inevitable delays have set this target back. Instead, Fortescue intends to truck its iron ore to port from the end of the line as it creeps closer. There is no time to lose. (
Click to expand...


Hi all

There was a very comprehensive article in the Eureka Report on Friday written by Charlie Aitken from Southern Cross Equities. Admittedly Charlie is an out and out convert to Fortescue, (and openly admits this), however he backs his stories with evidence and has been recommending Fortescue as a buy since they were $1.80 (or is that 18c in the new terminology?).

He writes:"......the rail has now moved past the mine infrastructure, giving absolute confidence that the project will be delivered on time" ..........."There has been some scepticism in the market that there may be some double-handling of ore to meet the May deadline - that trucks would be used to take ore from the rail head to the port. Clearly this will not the the case and it will be on trains all the way!"............... "The debate about Fortescue is now not whether it will work but what it will earn and what the market will pay for those earnings.".........."The production figure of 55mtpa is a given for Fortescue and is mostly priced into the stock."

And finally..."In my view, when the market comes around to focusing on Fortescue as a 100mtpa producer(2009-10), the stock will trade between $12.40 and $15 assuming it hasn't paid any dividends, which it is likely they will do."

I read Charlie's analysis in April last year, when he predicted that Fortescue would be a $100 share (when they just hit $20) and believe that he has a very strong understanding of this stock.

I'll leave you with one of his final statements...."Fortescue is the biggest story in Australian resources and very few Australian institutions own it (yet)."

Duckman
 
Duckman#72 said:
Hi all

There was a very comprehensive article in the Eureka Report on Friday written by Charlie Aitken from Southern Cross Equities. Admittedly Charlie is an out and out convert to Fortescue, (and openly admits this), however he backs his stories with evidence and has been recommending Fortescue as a buy since they were $1.80 (or is that 18c in the new terminology?).

He writes:"......the rail has now moved past the mine infrastructure, giving absolute confidence that the project will be delivered on time" ..........."There has been some scepticism in the market that there may be some double-handling of ore to meet the May deadline - that trucks would be used to take ore from the rail head to the port. Clearly this will not the the case and it will be on trains all the way!"............... "The debate about Fortescue is now not whether it will work but what it will earn and what the market will pay for those earnings.".........."The production figure of 55mtpa is a given for Fortescue and is mostly priced into the stock."

And finally..."In my view, when the market comes around to focusing on Fortescue as a 100mtpa producer(2009-10), the stock will trade between $12.40 and $15 assuming it hasn't paid any dividends, which it is likely they will do."

I read Charlie's analysis in April last year, when he predicted that Fortescue would be a $100 share (when they just hit $20) and believe that he has a very strong understanding of this stock.

I'll leave you with one of his final statements...."Fortescue is the biggest story in Australian resources and very few Australian institutions own it (yet)."

Duckman
Click to expand...

i read that too !!

you will find that the instos and probably skeptic public will only get on board when the shipment is made!

at the moment they expect the shipment to be made without the construction time it takes to build the rail network etc!! come on twiggy did this in 2 years - it took BHP and others 10 years +

also in the report it mentioned dividends in the future when earnings are reported..

and for those who say FMG has a 900 million debt - well with tax you can claim it as a loss ;) :2twocents
 
One things for sure
he's a positive thinker!
No doubt the rail is behind schedule - but, he'll get it there any-which-way as he says.
Brilliant people's-person ;)
 
I was playing around with comparison charts today and was very surprised
to find the share price graphs for FMG and MGX for the last 12 months are very similar.
MGX gained 330% over the period and
FMG gained 300%.

MGX has been in production for some time but ramping up
production with the takeover of Aztec,quite an interesting
comparison all the same.


holding shares in MGX and FMG
 
Getting it by a triple roadtrain on a 147t gross with 100t net,for around about 540kms all up,big operation for every 100t to port :banghead:,its very expensive as mmx do a 1200km round trip, ,thats why i got out at $50 for a nice earn,as i knew the rail wouldnt be on time.this must have an impact on the sp..tb
 
tigerboi said:
Getting it by a triple roadtrain on a 147t gross with 100t net,for around about 540kms all up,big operation for every 100t to port :banghead:,its very expensive as mmx do a 1200km round trip, ,thats why i got out at $50 for a nice earn,as i knew the rail wouldnt be on time.this must have an impact on the sp..tb
Click to expand...

Hi tb

I don't get what you mean about the triple roadtrain. Why do they have to do this?

Regards
Duckman
 

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