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fmg has made big find http://www.miningnews.net


FMG has made big find - letter to Dryblower


Wednesday, April 19, 2006

Dear Sir, I refer to the Dryblower column about the flow-through shares tax proposal in the 10 April edition of your newsletter. A basic tenet of the article was the statement that "there have been no significant mineral discoveries in Australia for many years". We, at FMG, take issue with this claim.



During the last two years FMG's exploration team has discovered and delineated over 2 billion tonnes of good quality iron ore.

The Cloudbreak area had never been drilled before while Christmas Creek had only a few very wide spaced reconnaissance holes prior to our work, so these are new virgin discoveries.

We had the courage of our convictions to go in without many pennies in the bank and have discovered Australia's largest iron ore resource in the face of conventional industry "wisdom" which said there was no point in looking.

As stated in our announcement dated 11 April our financial models predict an annual EBITDA of $1.3 billion for at least 20 years. I consider that this surpasses any reasonable definition of "significant".

To put it another way, by my estimation the cash flow which will result from this discovery is equivalent to that resulting from the discovery of 1 million ounces of gold per week every week for 18 months.

While I agree with Dryblower that spending more on exploration will not, of itself, result in more mineral discoveries, I believe that additional funding of well conceived, well planned and well executed exploration programmes is likely to result in more discoveries, particularly if this is applied consistently over several years.


Stuart Robinson
Chief Geologist
Fortescue Metals Group Ltd

http://www.miningnews.net

T10:))