FMG - Fortescue Ltd

diliff said:

WTF caused that massive (70 cents!!!) drop in the space of 5 minutes? The only announcement I can see on the ASX website is that FMG is going to allow Atlas to share its railways... surely not a big deal??

I'm pissed.. I had set a stop loss at 8.15 but accidentally set the trigger at 8.15 too, so by the time the order was placed, the share price had dived straight past :-(, I was poised to jump back in at 7.50 but didn't have the funds to buy in without the previous sale..... oh well...

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in response to your first paragraph...

I am wondering the same thing here. very sharp decent in the chart

Well, FMG is now officially my worst performing (active) stock

Of course we all know that the lull we are in will change and we will all be happy vegemites again.

I have been tempted a couple of time this week to jump in and average down - but you know, it still doesn't feel right just yet.....

Seeems like every time the SP wants to have a run, a wave of sellers keeps a cap on the rise. Of course none of us would have missed the media reports on the fund shorting that is supposedly at the base of the down trend.

I'm averaged to $9.87 with the lowest at $8.95, so a way to go but certainly not stressing too much.

The sharing out of the rail and port infrastructure to other junior Pilbara miners is a very cool move and will help cement additional income and create dependance for FMG. One would hope the comitments on infrastructure resources won't impede FMG's productivity.

Heres my thoughts on FMG at the moment.

If oil makes a comback so will resources.

Mind you the thought of dividend will lure many

Soz it hard to read.

Says Broken trendline IMO and
200 day MA is under pressure, if it dips under and bounces off shorters will come in.
MACD looks ready for a return though

Nice chart. Where did you get it? I've been looking for good software or web-based system. There's a lot of systems out there.

Go Nuke said:

Heres my thoughts on FMG at the moment.

If oil makes a comback so will resources.

Mind you the thought of dividend will lure many

Soz it hard to read.

Says Broken trendline IMO and
200 day MA is under pressure, if it dips under and bounces off shorters will come in.
MACD looks ready for a return though

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FMG-Atlas deal breathes fresh life into ore juniors
9th August 2008, 14:45 WST

Fortescue Metals Group is expected to receive a flood of applications from Pilbara iron ore juniors desperate to use its Port Hedland port facility following this week’s ground-breaking access deal with Atlas Iron.

The Atlas deal, only two weeks after another landmark agreement was signed under which Rio Tinto allowed Iron Ore Holdings to develop its stranded project, has breathed life into a junior iron ore sector hard hit by the sharemarket collapse.

The two deals have demonstrated to the juniors the avenues available to develop their deposits without needing to invest in costly infrastructure.

By finally agreeing to a port access deal with Atlas, Fortescue has also laid to rest mounting concerns it would renege on earlier pledges to allow juniors to use its port.

Although there are a raft of potential avenues for juniors to get their ore to the Pilbara coast, access to ports is the most critical. The WA Government’s third-party haulage regime only covers Rio’s and BHP Billiton’s railways, and not their ports.

Commercial terms of the Fortescue-Atlas deal have not been revealed. But, importantly for Atlas, it will be a relatively low-cost way to load ships with ore from its Pardoo operation.

Initially, Atlas will be granted space at Fortescue’s Herb Elliott facility at Port Hedland to stockpile enough ore for two shiploads before Christmas.

From next year, when the schedule will allow Atlas to fill at least one ship a month, the junior will need to construct a stockpile and a railway siding 3km south of the Herb Elliott facility, where its ore will be loaded on to passing Fortescue trains and taken to the port for unloading. It remains to be seen what impact, if any, it has on Fortescue’s own mine-to-port operation.

Rio and BHP have aggressively argued that allowing anyone else on to their infrastructure network would do irreparable damage to their integrated operations. The only concession they have made to date is Rio’s deal with Iron Ore Holdings, which is structured as a mine-gate sale.

The Kerry Stokes-controlled Iron Ore junior has to deliver ore from its small Phil’s Creek mine 5km to Rio’s massive Yandicoogina operation, where it gets paid on a per-tonne basis in return for handing over ownership of the product, in the process limiting the disruption to Rio’s transport operation.

The deal is ideal for juniors with small deposits like Phil’s Creek (8.3 million tonnes) that would otherwise be left stranded, but insufficient for the likes of Brockman Resources (its Marillana deposit contains one billion tonnes) which want to control the ore from mine to ship and reap higher profit margins.

In the Fortescue-Atlas deal, Atlas retains ownership of the ore all the way from the mine to when it is loaded on to an Atlas customer’s ship, which means it will have to squeeze into gaps in Fortescue’s operating schedule.

By delivering on a promise to open up Fortescue’s infrastructure, Mr Forrest has staked his reputation on a belief that allowing others into the loop will not cause material damage to his miner’s financial performance, contrary to the Rio-BHP claim.

The pressure will now be on Fortescue to formalise an MOU with BC Iron, to allow the junior to develop its Nullagine project, as well as deal with an expected raft of fresh applications.

PETER KLINGER

Source: http://www.thewest.com.au/default.aspx?MenuID=3&ContentID=90182

FMG seeking to move into New Zealand - Report

It is reported that Fortescue Metals Group is making its first foray into international mining by applying to test for minerals in a vast area in New Zealand.

FMG has made several applications to test for iron ore sands on the west coast of the South Island in an area covering 4,000 kilometers. The venture has upset a group of miners who claim their century old gold mining business could be jeopardized. BlueScope Steel is already dredging iron ore sands along the North Island.

It is understood other miners including Rio Tinto and China's Sinosteel also have interests in the region.

Mr Graeme Rowley official of FMG said that if its applications for permits are approved it will consult with concerned groups. He added that "At this stage it is so early in the process that we are not aware of some of the challenges that obviously through the consultation we will be involved in all of the issues that are raised by local community. Obviously through the consultation we will be involved in all of the issues that are raised by local community and obviously if certain things become prohibitive then obviously the tenders will not be granted."

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next BHP anyone? if they start diversifying now what they going to be like within the next 5-10 years?!

Fortescue Metals is full steam ahead with plans to more than double its annual iron ore production capacity.

According to the Sydney Morning Herald, the miner had initially planned to expand output from 55 million tonnes a year to 100 million tonnes, but the company now sees the possibility of an even higher output.

CEO Andrew Forrest says the equipment used to automatically unload iron ore onto rail cars is performing better than they had anticipated.

BHP and Rio Tinto each dump around 45 million tonnes per year from each of their rail cars, but Fortescue has demonstrated it can top that performance.

In order to reach the expanded output of around 120 million tons a year, the company would need to unload two iron ore cars per 90 seconds.

"unload two iron ore cars per 90 seconds."

Is that a realistic goal? How are the cars unloaded? do they have hinged floors and they just open up above a pit or are they offloaded in another way?

rotoso said:

"unload two iron ore cars per 90 seconds."

Is that a realistic goal? How are the cars unloaded? do they have hinged floors and they just open up above a pit or are they offloaded in another way?

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To make simple for u its like meat on a spit-

its a bit more technical then that but its a basic understanding-

argo-how u going-have u had a chance to grab more-or u like your position as it is?

i do like the prices at what they are now and today's prices seem even better-

even though most of us would like to see it going north-

I find it a buying chance even though i not making any money -lol

all in due time i say

Thanks

Nick--

I think there is some good news coming out of china today with inflation easing for the first time in 10 months.
This gives the Chinese Gov't more room to restrain the yuan's advance and concentrate on boosting economic growth through the usual ways - export rebates and yes...all that!!

However this is not to say that inflation has slowed globally because it hasn't in the US, UK, Australia (to a lesser extent) just to mention afew. My observation is that as inflation eases in China, the government will concentrate on boosting economic growth - especially their declining export sector:

Which is good for Australian exports: WHY??

This i think is good for the demand for fuel and resources (raw materials) for industry...Will directly impact on the ASX esp in the Resources sector. On the other hand, this will reverse the gains from lower Brent Crude Oil prices in recent times (there will be an upward swing in demand fo crude oil as economic activity increases).

Did anyone realise BHP & RIO rebound higher this afternoon??
Ofcoz you did...My point exactly because China is the Australias largest resources market - Positive speculation is already in markets.

So i hope this theory holds more in the coming days.

(Just an observation...not really advice DYOR)

njc.corp said:

To make simple for u its like meat on a spit-

its a bit more technical then that but its a basic understanding-

argo-how u going-have u had a chance to grab more-or u like your position as it is?

i do like the prices at what they are now and today's prices seem even better-

even though most of us would like to see it going north-

I find it a buying chance even though i not making any money -lol

all in due time i say

Thanks

Nick--

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tell you the truth, i am not buying any shares for the time being,

i am sitting put like a duck on all my holdings until the market starts its bull run again to which i might start accumulating again

only time will tell - maybe once earning seasons comes out in sept we might c changes?!

yeah i'm with you agro i'm staying out of the market at the moment.
spewing to see this come down so far from the $13.00 highs, but i'm going to hold all mine

My materials portfolio has down around 20% in average.. fmg is one of the worst got it at 9.5 and been downhill since.. but I still believe they will make a come back.. maybe not in a short term though.

I'm the same, maybe a little worse - down 27%. Have learnt though, from the thread on the benefits or lack of, of averaging down, that I am better to hold off adding more until we see the trend reverse.

Although very tempting to buy in now, it's probably better to wait - silly to tie up more $$'s only to lock in instant losses if she drops further.

Sorry if this has been covered before and if wrong would like to be corrected. Lots of pages to sift through!

The way I see FMG is they want to increase debt but are not increasing high grade deposit quantity. The amount of DSO high grade would quickly be depleted unless inventories are increased. I have read website but cannot find if they have targets for further discovery Chichester range or similiar quality. So in a nutshell I see re-investment of funds from high return operations into lower return operations and cannot see how that would improve s/p.

Then I maybe way off mark but the impression I have presently.

Spaghetti said:

Sorry if this has been covered before and if wrong would like to be corrected. Lots of pages to sift through!

The way I see FMG is they want to increase debt but are not increasing high grade deposit quantity. The amount of DSO high grade would quickly be depleted unless inventories are increased. I have read website but cannot find if they have targets for further discovery Chichester range or similiar quality. So in a nutshell I see re-investment of funds from high return operations into lower return operations and cannot see how that would improve s/p.

Then I maybe way off mark but the impression I have presently.

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Dear Spaghetti

IMO you are bloody right 100% !
FMG is having a too quick start to ramp up its production (at least on paper).
The fact remains you put garbage in and get garbage out.
FMG is depleting the high grade resources and that makes every body specially the short term investors happy.

There was never any ore analysis published for the next phase of expansion which is a worry. With low grade iron, high grade silica, alumina the production cost goes high through desanding facility (taking the silica and alumina out) and net realisation value also comes low as customer pays based on FE content.

So it is a double edged sword.

The silver lining of FMG is however a competent management and with surface miner the cost of production is much much lower than Rio Tinto or BHPB iron ore when comparing with apples with apples.

ON the long term even FMG has a vast resource field there could be an issue.

However again FMG is making good alliance with other small cap producers like AGO and soon will be others, has a good infrastructure facility which will make this stock a viable option IMO. I am no expert but sharing my common sense here.

Guess time will be the only judge if they should have started earlier with the lower grade mining. True economies of scale may see them through and demand should keep it profitable for a while, just how profitable and for how long is very difficult to ascertain with so many mixed messages from analysts.

So given this uncertainty further exploration I feel would be very important to excite potential share buyers.

btw as an aside, was prompted to ask an iron ore purity question on geology thread by a remark you made regarding silica on another thread. If you have a moment perhaps you could answer, would appreciate it, only if you have time of course.

the shorters cannot hold FMG under water for too long,

the moment we see a recovery in commodities and the general market, FMG will be back to double digits imo

earnings in September ?? dividend ?? twiggy has alot of surprises i think

with 'only' a expansion from 55 to 120 mtpa expansion, fmg might be able to pull it off from just cashflow. that is still is a 65mtpa expansion over say 2 years + a bit.
yeah it been a long time between drinks, must be about time for a dividend.

and its common sense to high grade first, it maximizes npv. however they can only mine what they have access to (top down)

Man this thread goes quite when the price is stagnating

As i have said before, if it gets to about $6.50 it is what I would call fair value and i would consider buying in after some more research regarding the points raised above about ore quality