fmg iron bridge jv

Based on this announcement, am I correct in assuming that $500m will be paid to Fortescue's The Pilbara Infrastructure TPI) as an upfront payment?

If so these funds will either be used to repay debt or add to the current cash position which should now be in excess of $2.5b.

If Iron Price spot price remains at current levels or doesn't fall below $120mt, the according to Financial Review profits for FNG would surge by 51.00%

Business Spectator post

Formosa invests big in Fortescue

31 min ago

Fortescue Metals Group Ltd has secured a significant investment from Formosa Plastics Group to its FMG Iron Bridge joint venture, which will develop the FMG Iron Bridge project.

In a statement to the Australian Securities Exchange, Fortescue said Formosa, Taiwan's largest private company, would contribute $US1.15 billion ($A1.26 billion) to the joint venture.

FMG Iron Bridge is jointly owned by Fortescue and a subsidiary of China’s Shanghai Baosteel Group Corporation.

The joint venture owns the North Star and Glacier Valley iron ore deposits, south of Port Hedland in Western Australia.


The Financial Review

Fortescue, Australia’s third-largest iron ore producer, is also attempting to sell a minority stake in its infrastructure assets to repay debt. But there is growing speculation that a higher spot price is bolstering the group’s resolve to retain complete control over the assets.

Royal Bank of Canada analyst Chris Drew said the iron ore price could be underpinned in the short- to medium-term by strong Chinese steel production, record Chinese iron ore imports and low iron ore inventories.

“With iron ore and the Australian dollar looking more favourable for producers, we would expect consensus earnings upgrades to add further support to the producers,” said Mr Drew.

If conditions persist through the December half, Mr Drew said earnings per share forecasts could increase by 51 per cent for Fortescue, 24 per cent for Rio and 119 per cent for fellow Western Australian-based iron ore junior producer, Atlas Iron.