The company’s site trip presentation reveals strip ratios at 1.5x from FY19-23 and a life-of-mine average of 2.4x. This is a positive development, in Morgan Stanley’s view, and base case valuation could rise, assuming no other charges.
What is of concern is the improvement could be at the cost of mine life, the production mix and rates could be different, and/or the years after FY38 could be higher.
Underweight rating and target of $3.30 maintained. Industry view is In-Line.
Sector: Materials.
Target price is $3.30.Current Price is $3.90. Difference: ($0.60) – (brackets indicate current price is over target). If FMG meets the Morgan Stanley target it will return approximately -18% (excluding dividends, fees and charges – negative figures indicate an expected loss).
