Hundreds of billions of debt - is that a typo?Twiggy is trying to lock down hundreds of agreements around the world to develop renewable energy projects to be funded by hundreds of billions in debt deals ..
Taking a broader perspective FMG is still showing a fully franked yield of 8-9% while creating a raft of hopefully new profit generating projects. I'm happy.
but let's face it , i got more div. than i hoped for ( full the WHOLE ) year last half , so am not particularly bitter
Yeah, most of the debt will be non recourse bonds secured by the underlying project,Hundreds of billions of debt - is that a typo?
He's a risk it all gambler and he looks like he enjoys a drink; there's key man risk along with concept to realisation risk and then starting off with mountains of debt again. I reckon he had some luck with the sustained price of iron ore when FMG was in debt. I assume FMG will be cordoned off from debt recourse?
i only started buying since August last year and the average is $17.05
Yes I must thank the ASF members like yourself @basilio ,@divs4ever etc for the input on the FMG thread, I really hadn't followed them much in the past, but you members got me in at $14.57 on 19/10/21.Thats a 14% annual rate dividend for you then at $0.86 franked per 6 months. (including franking)
+ a nice capital gain for you.
Indeed. To be fair as far as I can see it was VC's long term analysis that has been the major driver of ASF investors. It certainly turned my head and I have continued to follow it carefully. And getting back in at $14 plus late last year was a fantastic opportunity.Yes I must thank the ASF members like yourself @basilio ,@divs4ever etc for the input on the FMG thread, I really hadn't followed them much in the past, but you members got me in at $14.57 on 19/10/21.
So cheers everyone keep up the good input and robust debate.
I must thank a non member here (fastoy on another forum many moons ago) with whom I had debates about GRR or FMG. He convinced me on FMG in the end.Yes I must thank the ASF members.
I have been buying since 2004 and my lowest purchase price is $1.5 USD on 11/11/2008 my highest purchase price was $10.98 USD on 9/17/2021... My first purchase was for $44.10 USD which was prior to the 1 for 10 split....Yep, lets face it if you count the last two dividends together (inc franking) its over an 18% return if you bought your shares for $22.50 not a bad capital allocation in my view, better than holding cash in the bank, and its a lot higher if you bought for less.
Not to mention that if you bought your shares for $3 when I first started posting on here about FMG, the last 12 months has been a 140% dividend yield (inc franking), which still blows my mind.
Worth checking out if someone else can copy more onto the thread. (I was able to read it on my phone but not the computer)
What Australia’s best-funded start-up means to Fortescue (Feb 16, 2022)
It makes sense for iron ore billionaire Andrew Forrest to fund his green hydrogen ambitions through FMG because of the risk mitigation from China sourcing its iron ore elsewhere.
During its short life, Fortescue Future Industries has attracted more than its fair share of critics, including those who claim it should not be funded by Fortescue Metals Group.
The purist iron ore investors, who bought FMG for its strong cash flow generation and its capacity to pay market-leading dividends, object to 10 per cent of FMG’s profits going to FFI each year. FMG chief executive Elizabeth Gaines says the company’s hydrogen strategy will have no shortage of funding.
The argument against FFI being inside FMG is framed as a governance problem for the FMG board because of the conflict of interest between Andrew Forrest’s green hydrogen ambitions and the interests of FMG shareholders.
Safety net
What this ignores is the scale of the green energy growth option being shared with FMG shareholders and the benefits that will flow to FMG’s iron ore business from FFI achieving its objectives.
Forrest, who is chairman of FMG and FFI, could have funded the green hydrogen project through his private company by cranking up FMG’s dividend payout ratio. But by keeping FFI under the FMG umbrella, he protects the company against the threat of China finding alternative sources of iron ore over the next decade.
FMG’s outgoing chief executive, Elizabeth Gaines, says the market fails to understand the financial upside for FMG shareholders from having a symbiotic relationship with FFI. “Our view is that the market is recognising that there is a genuine value that’s being created by FFI and the ambitions that we have,” she says. “We’re seeing interest, certainly from our offshore investors, in the activities of FFI, the strategy that we will deliver on by 2030, and the efforts to decarbonise Fortescue.
“A lot of analysts are putting in the capital for decarbonising iron ore operations. They’re doing that for us and our competitors. They’re putting in the costs, but they’re not actually modelling the benefits.
“The benefits will be lower energy costs, better ESG outcomes and lower emissions. We won’t have to rely on expensive offsets. There are genuine benefits, and I think there is still a disconnect between the cost versus the value that’s created.”
FMG’s half-year results included increased transparency of FFI’s funding and expenditure.
FFI’s expenses rose by $US152 million ($212.4 million) to $US174 million in the six months to December 31, “due to the ramp-up in personnel supporting an increase in project assessments and feasibility studies for FFI initiatives”.
Green credentials
The company said FFI’s expenses were “associated with studies for key projects and expenditure on emerging technologies to develop green electricity, green hydrogen and green ammonia projects in both Australia and globally”.
FFI, which aims to produce 15 million tonnes of green hydrogen by 2030, had $US651 million sitting in the bank as of December 31, after the first-half operating and capital expenditure of $US242 million.
For this fiscal year, FFI’s expenditure is expected to be between $US400 million and $US600 million, inclusive of $US100 million to $US200 million of capital expenditure and $US300 million to $US400 million of operating expenditure.
It is pretty obvious that FFI is the best funded start-up in Australia and will remain so if FMG continues to tip 10 per cent of net profits into the company.
The funding formula means FFI should receive another $US1.8 billion in funding over the next five years, based on the consensus earnings forecasts published by S&P Global Market Intelligence.
Gaines is quick to point out that the bulk of the capital expenditure for green hydrogen projects undertaken by FFI will come from third parties or financial markets and not FMG shareholders.
“FFI will need a source of funding for those projects ... that might be specific project financing, it could be green-related financing, a green and social investment, or it might be partnering with others – there’s a range of opportunities.
“They’ll be assessed on a project-by-project basis. But we’re very disciplined in protecting Fortescue’s balance sheet and the investment-grade credit metrics. “At the same time, we’re committed to decarbonise because it’s the smart thing to do, and it will actually grow value for our stakeholders in our mining operations.”
Skate.
But by keeping FFI under the FMG umbrella, he protects the company against the threat of China finding alternative sources of iron ore over the next decade.
the market fails to understand the financial upside for FMG shareholders from having a symbiotic relationship with FFI.
The green projects won’t take a decade to show results, many will producing results incrementally as different stages are completed, for example FMG already have 60MW of solar installed and producing, which is directly offsetting the consumption of natural gas.Skate, or anyone, how does this work?
Why would keeping FFI within FMG be motivation for China not to look for better quality or cheaper IO elsewhere? Green credentials? Would that really be a commercial factor for China?
And this:
It's going to be years, perhaps a decade or more before any of these green projects get up and running. Changing their trucks and trains to run on ammonia is not financial upside really. And 'symbolic relationship', how does that generate cash?
The way it looks at the moment, FMG will have put about $1b into FFI shortly, and maybe up to $7b by the end of the decade, and massively increased their human resources expenditure without having any of their proposed projects anywhere near making a profit for a couple more decades.
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