Hi Pear, based on the the amount of capital expenditure to get...

Hi Pear, based on the the amount of capital expenditure to get to T155 I don't think 200m is that big a deal considering its a one off expense and the company has generated over $6b in sales for the first half.

The great news is that I just read an RBS report which estimates it currently costs FMG $55 per tonne of iron ore including shipping and royalties but not capex or interest both of which are reducing significantly.

I would expect this cost to drop to below $50 once they are producing at full capacity and possibly as low as $45 if the AUD continues to tank and shipping rates stay low.

This means that once they get to T155 next month the company will still be extremely profitable even if iron ore should drop $86 in the future.

Basically the company continues to derisk itself both from a debt and cost perspective and as a result I believe the stock price will continue to increase from here particularly as significant dividends start flowing over the next 6 to 12 months.

Their net debt is currently $8.6b and I would expect it to reduce to close to $5b by year end.