analyst comments, page-43

Seriously,

I really don't see how UBS comes up with those figures with AGO being a negative $US18 a tonne margin whilst FMG remains $9 a ton up. That's a $27 difference. I would really like to see how they got that.

AGO have stated their cost of production per ton was in the range of $43 to $47per ton. FMG is an average of $48 per ton (annual report). So all things being equal that's on par with each other with this.

From what the ABC said, as posted by plucker "When you work out their all-in cash costs, for Atlas its cost [of production per tonne] is $US87.50, for Fortescue it's $US84, for Mt Gibson it's $US78, so these prices don't leave much room for positive cashflow margins," he said."

That doesn't even gel with what USB is saying. They are all over the shop. All in costs would be all cost including new exploratory cost and development cost (which are really discretionary in nature and as such can be scaled back)

Lets also consider that FMG out of their margin has to fund substantial debt and development. AGO is development only, which they have stated will be done with cash flow. FMG is doing cash and debt so will always have an associated cost due to the debt component, which AGO does not.

The article stated it was based on EBIT, so I assume they must be referring to the current F/Y, which contained many one off cost of over $100 million being impairment costs (Balla Balla etc ) and cost associated with acquisitions.

If anybody can explain numerically how UBS came up with what they have, I would appreciate it. Otherwise I'm inclined to think its a BS article.

IMO its seems the scaremongers are out in force having a field day. Its easy to twist finacial statement and figures to create fear.