citigroup info continued, page-7

From mining News now also

At least, that’s if you are Fortescue Metals Group, which today copped a flogging on the market despite record price rises being booked by major iron miner Rio Tinto.

After yesterday reaching an all-time high of $13.15, today FMG cooled to 12c, a 6% fall and a 78c.

Part of this was profit taking, and part the force of gravity being exerted by the two super-massive black holes in the resources galaxy – BHP Billiton and Rio Tinto.

BHP was knocked back 4.7% or $2.16 to $43.72, and Rio fell 3.7% or a bruising $5.25 to $136.50.

But back to FMG , Dow Jones Newswires reported Citi as saying the new iron ore miner’s shares are actually worth $8.70, and its earning forecasts are looking less than rosy thanks to the high Australian dollar.

Citi also said to justify FMG’s current share price, its resources would need to be double current levels, and the project would need to be expanded to 200 million tonnes per annum.

Meanwhile, Rio and BHP’s falls also followed yesterday’s good news on iron ore pricing and BHP’s marathon three-hour investor and media briefing on steelmaking materials.

One interesting tidbit out of that was BHP’s comment about new resource potential in iron ore in Guinea and India. The company was reticent to say more but it seems Rio is not the only company eyeing off iron ore plays in hitherto unexamined parts of the world.

The overall mining sector was dragged lower by gloomy trading on the London Metal Exchange, which saw all the metals foundering by 1-2%. Other offshore leads such as the Dow Jones Industrial Average were also flat, leaving resources with nowhere to go.