fmg debt - a closer look, page-4

Perhaps we give you the benefit of the doubt and recognise you are posting in an Australian website in US dollar terms. The debt of FMG iscloser to A$3Bn. Interest rate on the majority of that is at 9.75% or above - ie A$300M pa in interest. The A$6.3Bn (FMG value) of subordinated debt is different again. And who knows whether FMG are receiving anywhere near the benchmark pricing - most posters who seem to be in the IO business seem to indicate an inferior quality to the benchmark product. And who also knows the real price of production - what we can suspect is that that price per tonne is not going to be achieved at the lower production volumes - it will be a price per tonne based on fixed and non fixed operating costs - the price will be higher than $20/t if the volumes are lower than anticipated. I am also one who believes the price will be higher regardless because I do not believe what we are told from this company. However I will accept that time will tell the truth on that one. And, IMO,we will see price reductions of 50% or more - not that unbelievable if you consider prices rose in the previous negotiations by 80% +, and the cost of energy, a major driver of the IO cost, has reduced sharply.

You also seem to have not factored in shipping issues, but I am sure they are not a problem and Twiggy has behaved absolutely honorably on his negotiations in this one.

Still, time will tell and every day gives us less time to wait.