FMG's cost of IO sold in 20/21 FY was $6.8bn or $37.32 per tonne. If we assume an average SP in the current year of say $77.32 per tonne, a pretax profit of $40 per tonne for 182m tonnes gives us a net profit after tax of $5.096bn or about $1.64 per share. This modest assumption imo would warrant a PE of at least 10. If we add the present value of IBO and FFI the present stock value should conservatively be at least $20, but imo with the higher grade prices coming from IBO, closer to $25. While the PV is very much dependent on ones expectations for FFI, the downside risk based on the current price is very low.
FMG Price at posting:
$14.25 Sentiment: Buy Disclosure: Held
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