Ann: June 2024 Quarterly Production Report, page-57

Hi @madamswer

You wrote;

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?

I'm not sure how that uplift in value can manifest itself in the financial performance of the company if FID's have only come through last year and up until this point the financial details haven't been provided? As they get through the FIDs they've got a lot of work then to get to financial close. They have mentioned many times that they will let investors know as soon as they get through those discussions.

You wrote:

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).

Each project is different because of their operating needs in different environments around the world. They’re working hard on making sure they get the right returns and if anyone knows what the IRR needs to be it's Fortescue . Again, their target is to get a double digit. What any prospective investor takes from the current information is entirely up to them. I have faith that they know what is best and they are proving that through their financial discipline. As I mentioned above, as soon as they get through the FIDs, then get to financial close they will let investors know. These things take time and most importantly especially at this early stage in the game and thereafter...financial discipline! Are the projects tracking well at the moment? The first three to four appear to be on track. We'll know soon enough.

You wrote;

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:

I don't see this as an issue at all. I actually see it as a completely new Company in transition. The media is all over this because it's news that sells for them. When people come and go, it's part of business. Fortescue have had an impressive record in this regard over a 20 year period, why doesn't the media focus on what they have achieved rather on this news? Why don't they focus on what they have achieved in a few short years with regards to their decarbonisation work? No, that's not 'negative news'. All you predominately hear and see is negative write ups about Fortescue and AF. People that ask this question don't really understand what a company in this massive kind of transition looks like or is aiming to achieve. It takes a true leader to take this to the next phase.

You wrote;

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.

It's called financial discipline. They won't do any projects that don't stack up. For me that's a positive.

Tony