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 $US85/t or less for five years out to 2019.”
JUST ANOTHER OPINION.
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No. | Vol. | Price($) |
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14 | 6097 | 18.600 |
10 | 6263 | 18.590 |
14 | 11710 | 18.580 |
7 | 6310 | 18.570 |
Price($) | Vol. | No. |
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18.620 | 6871 | 21 |
18.630 | 12586 | 23 |
18.640 | 11591 | 18 |
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18.660 | 17267 | 11 |
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