Ann: September Quarterly Production Report, page-64

Hi dbd25.
I reckon if you read the shorters on these threads you get a good handle on the bear case. But here are some thoughts.

IO prices could perform on the low side. Analysts forecast in the range of USD70 per tonne which might mean FMG gets USD55 to 60 as an average (versus its costs of USD35). This would give a dividend average of circa AUD$1 franked but there would be leaner years than that if it is an average.

IBO could have trouble ramping up. The IBO technology is novel particularly their method of classifying the ore. FmG spent hundred of millions of dollars piloting the technology so it should work but a novel technology always carries risk. Other magnetite projects in Australia have had a lot of trouble so IBO could take time and money to get it working. This would hit investor sentiment and the share price.

Green steel is new technology as is large scale hydrogen production for export. It carries risk. FMG has an excellent reputation for successfully developing new technology but there is still risk.

Grade is the big one. FMG product is 58% Fe which is the lowest of the major producers making FMG the most vulnerable to China cutting it off. IBO will help this a lot after ramp up because IBO has 22mtpa at 67% Fe which is the highest grade of the major producers.

In a realistic bear case FMG does not go broke its balance sheet is too strong. But it is hit by trouble ramping up technology and lower prices which hits sentiment and earnings. Under this bear scenario it could have a share price under $10 with dividends averaging 50 cents a HY franked.