Ann: June 2024 Quarterly Production Report, page-40

@TonyIndo,

In response to my question about how your assertion of "they're actually aquiring (sic) projects for $5000 per megawatt and then add value at say $200,000 per megawatt a... very impressive uplift in value - by 40 times!" actually manifests itself in the financial performance of the company, you did not provide an answer.

Instead you provided a link to a 16-month old post of yours which itself contains a link to the company's website, but for which the page no longer exists. To wit:




So, let's try again:

And then, you table a 2021 transcript of management commentary which you say references "they're actually aquiring (sic) projects for $5000 per megawatt and then add value at say $200,000 per megawatt a... very impressive uplift in value - by 40 times!"

Amazing that such luxurious valuation arbitrages are able to exist in markets without them being competed away, either due to the emergence of competing buyers or vendors ceasing to be so totally dumb as to sell assets valued at mere cents in the dollar.

That surely unprecedented market inefficiency aside, can you say how/where has this uplift in value manifest itself in the financial performance of the company?


And then, in response to my question about the IRR of FMG Energy investments you cite:

1.) The opinion of a stockbroking analyst (i.e., 15% , but sans any underlying assumptions.

and

2.) A FMG executive who states, "in double digits"

Dealing with 1.): Based on much precedence of inordinately poor outcomes from the recommendations of stockbroking analysts, I choose not to invest my family's capital on the basis of their opinions. (Frankly, I'd sooner take investment cue from a troupe of monkeys).

As for 2.), "double-digit" returns is disconcertingly vague, because it could mean anything from 10% to several multiples of 10%. If the real number it is the latter, then one wonders why it isn't articulated by FMG management that way (we wouldn't be having this discussion in that case), and if it closer to is the former, well, that's a level barely above the company's cost of capital, and certainly offers insufficient premium for the risks involved (e.g., risks in capital estimates, commissioning, operating, sovereign, counter-party, market).


While on the topic of objectively reasonable questions that business owners might ask, there's the revolving door of senior executives who have departed the company, most of them after disconcertingly short tenure:

Eva Hanly – Asia Pacific Energy
Christine Morris – CFO (2 months)
Fiona Hicks – Metals boss (6 months)
Judith Judson – Fortescue Zero (10 months)
Bruh Terfie – Fortescue Europe
Carlos Lange – Fortescue Europe (10 months)
Julie Shuttleworth - Fortescue Energy
Michael Gunner - Energy (less than 1 year)
Deborah Caudle – CFO Fortescue Energy (4 months)
Fiona Sugden – External Affairs
Guy Debelle (former RBA deputy head) (less than 6 months)
Malcom Turnbull – cut ties by resigning from Hydrogen subsidiary after only a few months


Oh, and this:

https://reneweconomy.com.au/crunch-time-for-forrests-big-green-hydrogen-plan-as-energy-costs-bite/

https://reneweconomy.com.au/giant-s...other-deadline-on-key-green-hydrogen-project/

The second article is dated April 2024.
Subsequent to that, the supply commitment from the supplier of the power, namely Genex, has placed the capacity - that had initially been locked up by the Gibson Island project, but the PPA agreement has expired due to the ongoing delays in FID close on the project - with other customers.