c1 cost down to $13 wmt, page-40

This looks to be an incredible result. Almost unbelievable the costs that have been cut from the business in such a short time. FMG may be a long term player after all. Well done.

The only concern I have is the sustainability of their cost cutting. In their report, overburden removed decreased by 47% compared to the same period last year, with slightly more ore mined. That is an absolutely huge change in strip ratio. It cannot be overstated the enormity of that, basically halving the overburden removal. My concern would be that perhaps last year was more indicative of the long term overburden removal requirements than this year. I don't know for sure, but that is my gut feeling, when they were mining in a higher price environment they would have been less likely to go to any extreme measures to cut costs temporarily. If that were the case, then not only would overburden removal revert to prior year levels at some point, but would in fact go much higher. Capex is also extremely low, which is good as long as it is sustainable. I'll keep an eye on this one, if they can maintain this level of costs for another 12 months, I'll start looking to buy fmg.