Ann: FY15 Half Year Results Presentation, page-152

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Daily iron ore price update (FMG debt)
Posted by Houses and Holes in Commodities, Iron ore priceat 5:35am on February 19, 2015 | 0 comments




Benchmark spot fell slightly to $63.40. Not much to go on with China closed but here are a couple of links in peak steel in China from the FT and Reuters. Nothing new but true!

And little material on FMG from The Australian:

The team at Morningstar said it expected negligible free cash flow at the miner until the end of fiscal 2017 as margins suffer under the lower iron ore price and as Fortescue delivers $US1.2 billion ($1.5bn) worth of iron ore already paid for by customers.

“The prepayments (for future tonnes) were a novel way to finance expansion but the cost is incurred during the next few years,” the analysts said.

“The balance sheet remains a weakness, particularly when coupled with the company’s poor competitive position.

An analysis from Goldman Sachs of the half-year result concludes that a focus remains on how Fortescue will manage its 2017, and possibly 2018, maturity on its bonds. The investment bank’s analysts said they had calculated that the miner would have about $250 million of secured capacity available in June after its 2015 full-year results, based on the lower iron ore price.

Pre-payments for iron ore are a type of hidden short term debt. China inc is clearly aiming to support the miner and if it continues could eventually just swallow it up by default.








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