Iron ore price, page-16236

Hey PB, agree with you.

To get reasonable snapshot of likely FMG profit, I now just add USD 95m for every USD 1 above break even price of USD 31. This accounts for moisture, tax paid above break even, 170mt shipped etc

Realised price of USD 50 would give about USD 1.80B or AUD 2.5Bat aud/usd of 0.715

At PE of 12 this gives AUD 30B or just under $10 per share

If IO is at USD 60, this would mean discount of 17%, which is quite high given WPF will tighten the discount once 25% of output comes from this product. It now fetches more than Jimblebar at port.

Also cashflow today is worth more than tomorrow...so as more profit is going to be generated in the next year given the demand supply imbalance, this is quite favourable for valuation purposes.

Also, calcs do not account for cash flow being higher than profit given amortisation/depreciation reduces profit but has no cash flow impact.

Also, franking credits rarely make an appearance in valuation models but in reality if you are paying say 0.70 in dividends, then the shareholder is getting 0.30 in credits attached and therefore their pre tax income is $1, not $0.70....

Funny how when it comes to shares, it generally isn’t considered but with property, it’s gross yields that are generally quoted. Anyway...

So yes I’m conclusion PB, FMG is a money printing machine and an investment I think were feeling pretty comfortable about!