I emailed the team yesterday at FMG seeking more understanding...

I emailed the team yesterday at FMG seeking more understanding on why only $500 million was added to cash on hand

. Answer is in 2 stages.

Revenue:

Dry tonne ave price = $50.33/dt

Convert to wet @ 8.5% = $46/wt


Cashflow calc (US$m):

Revenue 44 x $46 = 2,027

C1 cost 44 x $12.15 = (535)

Shipping 44 x $7 = (308) – based on a rough spot price average

Royalty ~ 7.5% of FOB revenue = (129)

Admin 44 x $0.4 = (18)


Operating cash flow $1,037


Capex ($173)


Net cashflow pre interest, tax and working capital = $864

I Then asked why $864 was not added to the $1.8 bill June 30th cash on hand

Answer:

The difference is due to the tax instalments which we paid during the quarter, the ongoing interest expense on our debt (as you note) and a few working capital movements across our receivables and payable balance. We have not actually published these amounts but fair to say that they are pretty consistent year on year. These three areas account for the $300m+ difference.

It was also stated that FMG management were pretty keen to pay the $2.2 bil debt off with cash as soon as possible, depending on market conditions.if not favourable, then they have various financing options they can consider to remove them from the very high 9.75% interest rate on $2.2Billion

My only remaining question is to understand if FMG makes tax instalments throughout the year why the large tax bill at the end of the year.$675 mil USD. I guess they never fully know how much tax they will need to pay as it depends on many things, one being the price they receive for their product.

Regards

MJAK