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FMG

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Iron ore price, page-41267

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arthinks

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26/11/21

05:31

Post #: 57868118
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Originally posted by Greatone: ↑

Hi Tom,
Keep believing that analysts are the people we should listen to if that is what you want to believe. And keep believing that a DCF is the universal method for valuing overall companies with multiple long life assets if that is what you want to believe.

However here is what I believe. It is all my opinion not investment advice.

1. The Champion Iron Annual report states that Iron ore prices over the last decade or so (which is the period of spot prices) have averaged USD98 or USD110 if inflation is included. FMG ore has a grade discount which is historically very variable but roughly 15% over the cycle.
2. FMG's cost of production is stated in its annual report at just under USD35 all in. FMG's production is stated in its annual report as 181mt. This is for long life assets.
3. There are 3.03B shares.
4. Doing simple mathematics, and using a tax rate of 30% and an exchange rate of 0.72, this gives after tax earnings per share on just the iron ore business of (110x0.85-35)x181Mx0.7/(0.72x3.03B) of $3.40. This is per share after tax. This is my opinion not advice on future earnings and I encourage posters to check the numbers and references for themselves.
5. In addition to those earnings, FMG has excellent leadership with an excellent track record. It does not have a record of poor investments like many of the other major mining companies. I encourage posters to compare FMG's history to other major mining companies. Don't just trust me.
6. In addition to those earnings FMG also has growth prospects from FFI and IBO. I encourage posters to research this themselves. IBO is a 22mtpa magnetite operation due for commissioning next year in which FMG is the major shareholder. FFI is a renewable energy company into which FMG has already invested a large sum of money but which as yet has no earnings.

In my opinion, a company with the earnings, growth and non financial advantages of FMG is worth at least $30 per share. This is my opinion it is not advice. I encourage all posters to look at the numbers and the non financial advantages of FMG for themselves and make their own decisions.

In my opinion, these analysts you keep quoting do not know what they are doing. They are using much lower iron ore price forecasts. In my opinion I trust the mining company executives more than I trust wet behind the ears analysts. Mining companies regularly post the iron ore cost curve in their reports because they know how critical it is to setting average prices. In my opinion the iron ore cost curve suggests a long term average iron or price of about USD100 which is right in the middle of the range that Champion specifically states. Hence in my opinion analysts are not giving good advice.

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Please screenshot that report saying FMG's cost of production... USD35 all in.

FMG Price at posting: $17.88 Sentiment: Buy Disclosure: Held
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Last $21.87		Change -0.545(2.43%)		Mkt cap ! $67.62B

Open	High	Low	Value	Volume
$22.18	$22.19	$21.82	$34.78M	1.577M

Buyers (Bids)

No.	Vol.	Price($)
13	3685	$21.86

Sellers (Offers)

Price($)	Vol.	No.
$21.88	3635	12

View Market Depth

No.	Vol.	Price($)
5	1830	21.830
10	3309	21.820
13	8411	21.810
26	15940	21.800
7	4904	21.790

Price($)	Vol.	No.
21.840	5988	17
21.850	9284	15
21.860	6679	14
21.870	4559	13
21.880	4869	9

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