Iron ore price, page-598

Turns out I was too optimistic on both the cash position and the realised price.

Whilst there is a good chance that the FMG share price might rebound a bit from today, I am concerned that the price of io is trending downwards as FMG management itself acknowledges and I don't see a lot of expectation for capital gain (share price gain - as a result of rising io prices or changes or plans FMG have announced so far).

The recent 20 cent dividend was a 38 per cent payout on NPAT. But that NPAT (on FMG producing as fast as it is likely too for a while) is probably about as good as FMG is going to see for a while (excepting perhaps the last three months - when the iron ore price was higher - but the realisation fell) because they can't get costs down too much more, or volumes of ore up much more.

FMG has been good to me. But until something changes in the macro environment or FMG makes clearer its plans I don't think the return on investment on an annualised basis warrants a share price as high as it is now. Takes too many years to earn current share price (around 5.50) from prospective dividends in my opinion.