Fair Value For FMG, page-9

Hi, this is my view on FMG as a investment, not a recommendation just my thoughts. The economies of the world are in a mess at the present. The covid 19 outbreak has resulted in money printing on an unbelievable scale, a 40% increase in money supply in 12 months in the USA! The end result of this is inflation world wide, just like in the 1970s. In this environment hard assets like commodities will do okay. All governments around the world have unleashed an unparalleled level of infrastructure spending, it will probably all end in tears, but in the short term, steel and iron ore will do well. FMG is a single resource play, but doing it well beats having a dozen different business of different complexity to manage. Simply dig the red dirt out of the ground and put it on the ship, FMG is not really a miner but a quarry operator, nice and simple. The 30% drop in price of FMG is very unpleasant but should be seen as an opportunity to buy in at a reasonable price and be in line for 3 dividend payments in the next 13 months. Even with iron ore at $160.00, FMG is a money machine, and with Western Australia government keeping Covid out of its state this means there should be no shut down of mines because of the pandemic. Lower prices mean higher cost operations shut down! I believe the price has bottomed and even after going ex-dividend the price will hold up if the iron ore price remains stable. I expect a dividend of perhaps $2.50 to be announced and later dividends of around $1.00 to $1.50 in the future with the current iron ore price. One last thing is The Australian Dollar, it is looking like it has caught Covid 19 it is looking very sick, and The Australian government is spending money it does not have to prop up the economy, I remember the good old days of 2000 when the AUD was 48 cents to the US dollar, those were the days, they well may return!
Good Luck