fmg at key level. take profits or short., page-11

Markie Mills

Cash on Hand at 30 June was $2.2b

As at Sept 30 $2.8b after paying dividend of $300m

Add to this receipt of $623.0m from Formosa post 30 Sept they are currently sitting on around $3.4B plus cash generated 1 Oct to date. They have to pay in Nov the $140.0m debt being charged at 9.00%.

Thee Cap[ex for this year is $1.9b, but the Report is silent on wether or not some of the $1.9b has already been paid in Sept Qtr, leaving them will the balance to pay at a later date.

Either way if realised selling price including freight was $121.0mt and they shipped 26.0mt and total costs including interest based on previous reports is no more than $70.0mt.

Then profit for the qtr should be around ($50.0mt @26.0mt) $1.3b

Profit last financial year was $1.75b for the 12 months.

So what if they missed analysts targets by about 2.0mt-3.0mt, they had good reasons, safety issues, taking over from contractor, wet season and conveyor belt repairs.

Guidance is still 127.0mt to 133.0mt and production costs are lower

My average buy in price is around $4.15-$4.20 and I am still making a profit, obviously much less than yesterday, but I still think that long term FMG has a future.

If we had a crystal ball should have sold yesterday and bought back in after the dust settles. However Capital Gains Tax is an issue, need to hold for 12mths to get a 50.0% discounts (assuming they don't tank and their is no gain).