Pear, I think your post is somewhat harsh. They needed to fund...

Pear, I think your post is somewhat harsh.

They needed to fund capex to achieve 155.0mt per annum, infrastructure, port facilities etc...

Once the bulk of the capex spending was completed including restarting Kings mine, they immediately started repaying debt. They have repaid in total $3.6b plus some finance lease commitments.

It is just bad luck that the IO price tanked, had it remained at around $100.00mt for another 6-12 months based on the increased volumes then there would have been more significant reductions to the debt, which was their priority.

We should not forget that the 155.0mt production rate was not reached until March 2014, 12 months ago, and we all know what has happened to the price since then.

From making super profits, to close to break-even somewhat restricts their ability to continue repaying principal debt.

The $3.6b reduction and initial refinancing has resulted in savings of US$330.0m pa

"The lower rates are a furphy when you consider that we will be paying the lower interest for a longer period."

I cannot understand the logic here, would you prefer higher interest costs and shorter repayment terms?

It's much better to refinance at a lower rate and therefore further reduce costs and reduce the risk associated with a shorter deadline for repayment of the principal. In any event at their option they can repay before the due dates as is the case currently, meaning that if IO prices recover they can as before make large principal reductions to reduce the gearing level.

Based on the announcement they are also refinancing the $1.0b due in 2017, which is smart.

They have $1.6b in cash and want to preserve the cash should the price of IO slip further, this allows them to have a cash reserve to insulate them for some time against any unforeseen cash flow issues.

Can anyone really argue that Management has not performed well as has taken steps to control costs and efficiency gains where possible on items that they can control.

The only missing link that would make FMG an exceptional investment is not management but the IO price, which is not under their control.