fmg secures sales

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FMG secures sales

Ben Sharples
Monday, March 13, 2006

BATTLE-scarred Fortescue Metals Group has secured additional sales agreements for its Chichester Range iron ore project in the Pilbara, locking in over 80% of the planned 45 million tonnes per annum of production.



FMG said it had signed agreements with six undisclosed China-based steel mills for an aggregate 6.4Mtpa for a 10-year period, with contract prices set "with reference to industry standards".

The company now has 26 sales agreements in place with 26 different steel mills.

FMG executive director Graeme Rowley told MiningNews.net the company hadn't received any negative feedback in any shape or form from potential customers in regards to the recent ASIC action.

The company said previously it intended to hold committed sales well below 100% of proposed initial production to provide marketing flexibility as the project moved through the implementation phase.

"What we need to do is to have an opportunity, depending on how we secure equity, to ensure that we have an opportunity to provide sales if the potential equity partner would like that," Rowley said.

He said financing was progressing but wouldn't be drawn on timing.

The $A2.5 billion Chichester Range project has reserves of 1.06 billion tonnes with first production pegged for 2008.

FMG recently found itself on the wrong side of the law with corporate regulator ASIC seeking penalties in the order of $3.6 million in relation to market disclosure of certain agreements signed in 2004.

Shares in FMG hit a 52-week low of $2.25 in June before gaining ground to hit a 52-week high of $6.60 in late January. The stock shed 15c (3%) during morning trade to $4.89.

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