The bottom line

From Barclays via the SMH blog:
“Lower iron ore prices (and consequently a lower share price) would increase the risk/reward for FMG,” the broker says.
Barclays points to the following “under-appreciated” factors which could help the share price:
Currency: “a [5 cent] change in the $A/$US rate would impact NPV by 13 per cent, on our estimates”;
Shipping costs: “a 200-point change in the BDI could change NPV by 7 per cent”;
State royalties: “a reduction in royalty costs could cushion the impact of pricing by 6 per cent”;
Grades: The grade discount has overshot and “now appear due for a small reversal”
And here’s the only line that matters: “On the balance sheet, we do not see much risk unless iron ore remains at $US85/t or less for five years out to 2019.”

JUST ANOTHER OPINION.