FMG - Fortescue Ltd

[Miner]

Folks
It is a great news for FMG supporters that the company has won all three court cases against BHP regarding rail access. It is a great moral victory and snub for both Rio and BHPB.
In my very early post probably I have mentioned how it was an arrogant step by Mr Ian Ashby of BHPB Iron Ore and one of the MD of Rio group in Global Iron Conference stating they fight tooth and nail not to release any part of the railway. I personally feed for those multi million salary earners. If they woudl have read the National Competition Policy then the silk ties need not to argue in court. But any way that is a minor observation.

Question is what FMG will gain with this?
On a short term - little excepting its share price will balloon up again and BHPB will get the snub. As the appeal process will continue over the time FMG is slated its FOOS on ship . Due date officially is May 08 and for the execution team it is Mar 08.
Medium to long term FMG will gain a lot. It will be sell its own railway to Atlas Iron and other iron ore producers. It will help to spin off its infrastructure company as was inferrred by the market.
However the point is if you refer to FMG project progress :

1. OUT OF 282 KM Rail Corridor until 29 Sept only 20 km has been constructed. It will be a far cry to get this railway to be finished by even May 08. The silver lining is if BHP loses the appeal before May 08 then FMG share will probably shoot around $75 as predicted by Charles Atkin the only Australian broker bullish about FMG (Souther Cross Eq) in his report published after he visited the site some months back.
2. However current commitment 45 MTPA rate will be achieved not by May 08. Probably it will be at 35 MTPA and still a good milestone .
3. The real 45 MTPA will be achieved by end of 2008.
4. Next is 55 MPTA by May 08 as claimed in FMG dossier for fund raising available from ASX site. It is again a wish list. There is no demonstrated plan seen in market by FMG to achieve this .
5. 200 MTPA achievement is a current dream (share hype) as there was no drill result released since 6 months and probably there will be none by Feb 08.
   
   Recently they advertised for Exploration Geologist. So just showing the big tenement will not demonstrate the feasibility of achieving 200 MTPA.
   
   Good luck

 

[vishalt]

What I want to know is if it is going to $100 w00t!?

Pretty interesting which one will be the next to cross the line eh, IPL/COH are hot on the trails of Macquarie to reach it!

 

[Miner]

Vishalt
What a pretty question. If any one would know when it will hit $100 then they would have made millions and buy them at right price.
We all have to use our own research, speculation and cocktail it with bit of wisdom and 'luck'.
Keep with a good hope.

Regards
Miner

 

[krisbarry]

What I want to know is if it is going to $100 w00t!?

Pretty interesting which one will be the next to cross the line eh, IPL/COH are hot on the trails of Macquarie to reach it!

I suggest it will not be much longer, as BHP and Rio Tinto start to negotiate new contract prices for Iron ore, later this year. The talk of the town is a rise of between 30 to 50% for 2008. If this occurs then all Iron Ore related stock will rise.

 

[vishalt]

Holy cow an 8 per cent surge today, what's happening with Fortescue lol?

I'd love to put money in it but that'd just go against my big-cap/security discipline BUT MAN, FROM $2 LAST JAN TO $53 this thing has gone ballistic, is there any stop D:!?

 

[Prospector]

is there any stop D:!?

I really, really hope not! Because of its growth in recent, days it is now my heaviest share in my super fund. Which is a pain really because the Investment plans says I can only have up to 10% of one share in the portfolio. Especially a speculative one. It was only 4% six months ago. It is way more than that now but I dont want to sell any just yet.

 

[GreatPig]

Just heading off again after a small sideways consolidation which got it nearly back to the recent trend line. Perhaps just building up the steam to concisively break the $50 mark.

I originally bought in at around $9 a year ago, but then sold not long afterwards on a dip for around $13 thinking I'd made a good profit (which I had, just not as good as it could have been... ).

Cheers,
GP

 

[mayk]

Hi Folks,

Well I am interested in FMG, but I think I might have missed the train on this one. Can someone do some fundamental anlysis of the share price now and if it will be worth buying this share at this stage ( considering if it will ever hits $100).

I am sure $ 100 is a speculation, just like $50 mark was . Some comments regarding this will be appreciated.

Thanks

 

[Plasmapark]

Hey GP....join the club mate.
I started playing with FMG when it was $2.00....held 10k until it hit $8.00 last April when I offloaded, also thinking I'd done okay.
I'm still black and blue from the kicking I've given myself....such is life....nature of the beast etc.

 

[brilliantmichael]

I wonder how many millionaires have actually been made out of this stock?

In hindsight, it's pretty obvious anybody could have done it if they'd bought in at $1 and grew their money 50 fold in less than 3 years.

But there's the catch, FMG is like 1 out of 2000 stocks, and something like 1 out of 500 resource stocks, so who could ever have picked it out to be special back then? How many people can claim Andrew Forrest to be their buddy, and have known his character, and the company's plans well enough to have known how big the buzz would become on this stock? (Even well before his 'fund raising' campaigns)

And even though we tend to think all the original investors stuck around, they probably didn't (all the little investors), except the big insiders and their mates up the top. All the little guys jumped out when their money multiplied 3, maybe 4 times. So maybe they jumped back in again, and then maybe out again. In... out... in... out...

I doubt many, let alone anyone other than insiders, have actually risked enough of their capital to make them millionaires out of this stock. And I doubt any non-insiders stuck around to reap the benefit of this anomaly-of-fortune. It was just a hidden lottery ticket with a lttle more clues lying around it - that's all. But it's important to remember it was always only just that: a lottery ticket with small odds.

And ask yourself, who can really place a definitive future value on this stock? Now I know the old saying: 'You don't need to know how fat somebody is to know they're fat.' (i.o.w. you don't need to have a definitive valuation on a stock to know it's good value), but iron ore that hasn't even started production? Who knows how valuable or not FMG's processing capacity is? "A what the heck I'll buy in case it's worth $80, why not $100 a share!"

The price has been rising because the market firmly believes there's something "really special" about this stock (namely that it's price has a lot more to rocket)

 

[Miner]

The rocket is no more rocket. It was a hype (even the SP is so high) and then it was changed to SV special value.
Basically it was a low grade high silica iron ore gettng treated to increase some iron percent. This process will generate a lot of dirt which is yet to be ascertained where to dump.
200 MT is far off but must be something lady luck on Andrew's future with very convincing share price.
People have enough money to speculate as no one is asking for what level of production and how far really it is behind the schedule. Plus also no one in market is asking about the assay result from Christmas Creek.
It is too hot and I am keeping it off from my target.

Let our mini horses run on FMG

Regards

 

[renim]

wild ass guess at fmg value
if BHP's iron ore was 110Mtpa last year
and BHP's iron ore was 15% of the group's earnings
and a possible 30% price rise would've made bhp's iron ore 24% of its profit.
then for a $150B BHP, 24% is $36b
110Mtpa ~ 36b gives $0.32b per Mtpa

so 45Mtpa ~ 14.7b
55Mtpa ~ 18b
100Mtpa ~ 32b
200Mtpa ~ 64b

I'll leave it to the reader to decide if this is under or overvalued with all the other subtleties of FMG to consider and other possible metrics.

My BHP summary is very cursory, and quite possibly inaccurate, if there is better data out there, please correct this post!

 

[Miner]

Hi
May I add that in the calculated regime of 15% hike in 2008 FMG will just begin to produce in May 2008 (see my earlier comments on railways). In the financial year end 07-08 it will hardly make one month's production of 35 MTPA production (please note 45 MTPA is not going to achieve in 2008 and I am on the money here). So the profit will really be realised in 2009and that will be in full form.
Expansion to 55 or 100 MTPA will not be before 2010 if at all teh BFS starts in this year.

Nevertheless encash the profit now and do not worry on company's production etc. That is why directors like Rowley and Twiggy are there to worry for and earn their lion's share of profit through options.

Regards

 

[michael_selway]

wild ass guess at fmg value
if BHP's iron ore was 110Mtpa last year
and BHP's iron ore was 15% of the group's earnings
and a possible 30% price rise would've made bhp's iron ore 24% of its profit.
then for a $150B BHP, 24% is $36b
110Mtpa ~ 36b gives $0.32b per Mtpa

so 45Mtpa ~ 14.7b
55Mtpa ~ 18b
100Mtpa ~ 32b
200Mtpa ~ 64b

I'll leave it to the reader to decide if this is under or overvalued with all the other subtleties of FMG to consider and other possible metrics.

My BHP summary is very cursory, and quite possibly inaccurate, if there is better data out there, please correct this post!

Hi FMG, new numbers

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS -26.2 -54.3 308.2 528.6
DPS 0.0 0.0 0.0 69.4

thx

MS

 

[BigJohnny]

FMG to increase liquidity thru a 10 for 1 split, will end up with around 2.7 billion shares on issue. An extraordinary meeting will be announced to mkt.

http://abc.net.au/news/stories/2007/11/08/2085879.htm?section=business

 

[lbradman]

Hey GP....join the club mate.
I started playing with FMG when it was $2.00....held 10k until it hit $8.00 last April when I offloaded, also thinking I'd done okay.
I'm still black and blue from the kicking I've given myself....such is life....nature of the beast etc.

OMG talk about greed. Most people would be stoked with the $60,000 you made from this one trade. If your punishing yourself for not holding on longer then your a fool. That stock could have just as easily nosedived after you had sold so who's to say it would rise as high as it did. Everything is easy to say in hindsight but if you arent satisfied with this win then next time you hold onto a similar stock are you going to go the extra distance in the hope this time round it would go all the way? Especially on a speccy stock like this it would more than likely turn you into a pauper faster the next time round.

I can already tell with the boom and using stocks like this as an example their would already be a flurry of new books hitting the shelves with titles like 'How I turned a thousand dollars to a million' just to feed into the greed mentality. And I'm sure they'll all be touting how they bought FMG at its low and rode it all the way to the top ...yeah right. Then again thats how losing traders make money by writing crap books like this that they know people love to believe.

 

[Sean K]

Holy Cow.

15 November 2007
The Companies Officer
Australian Stock Exchange Ltd
Exchange Plaza
Perth WA 6000

Dear Sir

FORTESCUE ANNOUNCES MASSIVE NEW IRON ORE DISCOVERY -
1 BILLION TONNES IN THE CENTRAL PILBARA

Fortescue Metals Group Ltd (“Fortescue”) is pleased to announce an estimate
of Inferred Resources of iron ore totalling in excess of 1 billion tonnes (Bt) for
the Serenity area comprising the western one-third of its Solomon Project
area (see appendix 1).
A total of 1,014 Bt averaging 56% Fe has been defined as an Inferred
Resource in accordance with the JORC Code. Within this deposit Fortescue
has defined 337 million tonnes (Mt) of channel iron deposit averaging 56.7%
Fe.
Fortescue is continuing to drill equally prospective targets in the eastern
portion of the Solomon Project area and expects to announce additional
resources in that area before Christmas. Serenity is located about 60
kilometres north-northwest of Tom Price in the Pilbara region of Western
Australia.

How much more do they need?

Stock breaks $60, up 17% ish.

Incredible.

 

[Prospector]

My God I just bought some more on Monday! Bad luck Miner.:

I had to pay a tax bill today of $9000; I just made that in 1 minute on FMG! I looked 30 minutes ago and it hadnt moved - refreshed the page and up by $10!

Now, stay there for a bit!

 

[GreatPig]

Lucky you... I just sold it late last week for $45.87 - the day before it jumped up 13% odd.

Talk about royally screwed... and meanwhile, the "better prospect" I still hold continues to fall

GP

 

[Prospector]

Oh GP, doesnt that just suck when that happens. But I am sure you made a tidy profit anyway I have found a sure way to raise the price of a share is to sell it; and conversely, when I buy in it falls.

It seems to be settling a little now - maybe I should sell too!