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Business Description: Fortescue Metals Group Ltd (FMG) is an iron ore production and exploration company with assets located in the Pilbara region of Western Australia. FMG currently holds reserves of 2.34 Bt of hematite ore within its operating Chichester and Solomon Hubs, with FY13 total ore mined and ore shipment of 94.6Mt and 80.9Mt respectively. Total resource base currently stands at 15.6Bt from both operating and development properties.
Strategy Analysis: Fortescue's goal is to become a low cost iron ore miner in the Pilbara region of WA. From an initial base of 40 million tonnes a year, the company expanded to 55 million tonnes a year in fiscal 2012. The next planned step is to 155 million tonnes at a cost of just over USD 10 billion including the new mining fleet. Fortescue aims to exit December 2013 at a production rate of 155 million tonnes per annum. Further expansions beyond 155 million tonnes will be considered but Fortescue aims to strengthen its balance sheet before undertaking any significant new capital expenditure.
Fortescue Metals Group reported NPAT down 40% to US$478.0m for the half-year ended 31 December 2012. Revenues from ordinary activities were US$3.3bn, down 2% from the same period last year. Diluted EPS was 15.35 US cents compared to 25.71 US cents last year. Net operating cash flow was US$479.0m compared to US$1.19bn last year. No dividend was declared. FY13 guidance of total shipped tonnes remains between 82wMt and 84wMt. Solomon's Firetail mine is now expected to achieve a 20Mtpa run rate during April 2013 after a severe rain event caused a minor delay in construction. This will increase the company's production capacity to 115Mtpa.
By Betty Lam (Sales Trader, CMC Markets) 18/12/2014 |
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By Michael McCarthy (chief market strategist, CMC Markets) 18/12/2014 |
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By Betty Lam (Sales Trader, CMC Markets) 11/12/2014 |
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By Ric Spooner (Chief Market Analyst, CMC Markets) 10/12/2014 |
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BR Securities Australia Pty Ltd 2/12/2014 |
December 2014 could go down as a nasty moment in Australian finance. MYEFO will reveal a deteriorating budget deficit and the UNFCCC meeting in Lima, Peru will provide the agreement, to be ratified in Paris in 2015, on how much (or little) CO2 is to be allowed into the atmosphere from 2020.
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