Iron ore price, page-9135

The weak AUD has also come at the right time for FMG. The standard AUD rate used by FMG in its forecasts is 0.75. With the dollar hovering in the 71s, eliwana’s capex of US1.28b would be slightly less using a lower AUD rate (some would be direct USD outlays but much of the capex would be wages in AUD) Of course this assumes a low AUD during the duration of the capex period.

Also, investing cash outflows this FY is expected to be USD1.2b. Delivery and payment of the final carrier would likely be in USD but once again the lower AUD would require less USD for a fixed amount of AUD for majority of investing/sustaining capital expenditure incurred.

Cost of sales (c1) last year was USD 2.1b. Much of this would be AUD costs converted back to usd. The AUD averaged around 0.77 in fy18. Given the AUD has averaged around 7% less and oil well below last years avg also, cost of sales in USD this FY may conservatively be up to USD 100m less.

Overall, the above in conjunction with strong cash margins will continue to keep debt and gearing levels low.