fmg comfortable with forecasts *****

FMG comfortable with forecasts


Paul Garvey


Tuesday, November 08, 2005
FORTESCUE Metals Group chief executive Andrew Forrest says the company is on track to secure funding for its $A2 billion Pilbara iron ore dream within four to five months.

Speaking to reporters on the sidelines of FMG's annual general meeting today, Forrest said the company had a comfortable window within which to finalise the securing of capital for the project.

"We believe that putting together finance is only a matter of time, not if, and we've made very good progress on a number of points with that," Forrest said.

FMG has indicated that first production from its Pilbara tenements would come in late 2007 or early 2008.

"We have a 20-22 month construction time, so we've actually got a little bit of room, but we don't intend to use all of it," he said.

"I think if you've got a 20-month construction period, you're sitting in November now, you could probably do it [secure funding] within the next four or five months comfortably… but I would suggest it's likely to be sooner."

Forrest added that the company had also set an internal reserve target of one billion tonnes of ore to alleviate the concerns of a number of industry commentators. The company presently has 2.4 billion tonnes of resources and 400 million tonnes of reserves within the 10% of the tenements it has assessed to date.

"There's really been no issue from those macro investors that have looked at us about whether or not we'll ever get [the project's resources] to reserves, but there's been enormous speculation in the media so I've made an internal target of setting a billion tonnes of reserves, just to remove any doubt," Forrest said.

Forrest also welcomed last week's finding by the National Competition Council recommending shared use of BHP Billiton's Mt Newman rail line, but suggested there was still a long way to go before third parties could enjoy access to the infrastructure. Allowing third-party access to the infrastructure could potentially allow easier exploitation of iron ore deposits in the region owned by smaller companies.

"I note the comments which have come back which are that the coal industry with shared access is not as efficient, but you've got to ask the question, 'not efficient for whom?'," Forrest said.

"You would say it's very efficient for the other 15-odd companies who are sharing those infrastructure assets."

Shares in FMG closed up 8c at $4.85.