is my maths right?, page-14

dodgy its all about risk and reward


TRH is priced as a shell with some cash with a project that currently looks like 10 years away/ if at all.



But in the stockmarket MANAGEMENT and CONTACTS are worth sooooooooooooooooooooooooooooooooo much


If we get mining permits and a proven JORC then all we need is funding



Google monti and forrest



The below article shows forrest relationship with AMERICAN FUND Harbinger Capital , the US imports potash, the project is in the US


JOIN the DOTS, hopefully they will connect one day









Aussies too late in boarding Twiggy's gravy train to Pilbara ric Jennifer Hewett, National affairs correspondent From: The Australian December 01, 2007 12:00AM Increase Text SizeDecrease Text SizePrintEmail Share
Add to DiggAdd to del.icio.usAdd to FacebookAdd to KwoffAdd to MyspaceAdd to NewsvineWhat are these?NEXT Tuesday morning, Fortescue Metals will fly a planeload of analysts, brokers and investors north to the Pilbara to face reality under the blazing West Australian sun.
The reality is that Andrew Forrest's much-derided vision to become "the new force in iron ore" is now finally coming close to being built in the harsh, red soil of WA's northwest. And, as the group inspects Fortescue's new port facility at Port Hedland (84per cent completed), walks part of the 260km Fortescue railway track (68 per cent completed) and flies out to the mine site (76 per cent completed), some of the potential Australian investors and analysts are likely to kick themselves for what they missed. Certainly, they should.

The reason is the extraordinary rise in the share price of Fortescue Metals Group - 430 per cent over the past year. That is remarkable even by the abnormal standards of the current runaway, much-bigger-than-expected and now becoming the stronger-for-longer resources boom. Fortescue's return on capital dwarfs the big returns on investments in BHP and Rio over the past few years, as the market realised how much it had underestimated the entire iron-ore story. It is now in the top 25 Australian companies by market capitalisation at $15.6billion and in the top 100 ASX S&P index, having come from nothing less than five years ago. This is six months before it is scheduled to ship its very first tonne of iron ore. And with the proposed BHP merger with Rio likely to drag on, the emergence of Fortescue as an alternative is only likely to increase the interest from its customers in encouraging an alternative source.


Yet Australian institutions only account for a grand total of 3.9per cent of the Fortescue share registry. Despite having scrambled to belatedly get on board the Pilbara iron-ore train as it steadily gathered pace, they have consistently and resolutely refused to trust Forrest, 46, to deliver any of it. Instead, their interest focused on BHP and Rio. Most were so suspicious of Forrest's troubled entrepreneurial history at the Anaconda nickel mine they didn't believe his radical use of surface mining equipment would work and they didn't think the ore body in his tenements was of sufficient quality. They just didn't want to take the risk.

But as it turned out, Forrest was the right man in the right place at exactly the right time. Iron ore is it. The result is that it is mainly US and some European investors who have backed Forrest and made fortunes doing so, while all Australian funds are underweight.

Fortescue's share price closed yesterday up $2.20 at $56.60.

That is below its record closing price of $61.20 on November 15, but in April it was just over $20. As recently as 2005, the shares hit a low of $2.50. When Forrest first formed Fortescue out of a small listed company called Allied Mining and Processing in April, 2003, the stock was 5c. Four anda half years later, it's possible to argue that the recent surge in particular means the current share price is now overvalued. Many do. But even if that belief is widely held, it's nowhere near enough to counter the obvious: Australian investors have been missing out spectacularly on a truly rocket-fuelled rise.

Forrest is not alone in believing it will go much higher yet. The price of iron ore has risen 140 per cent in the past five years, but there is another huge rise of up to 70 per cent predicted for next year, along with soaring Chinese demand.

Little of this success, however, appears to have yet convinced the major Australian institutions and fund managers. Some fund managers, such as Perpetual, are simply not allowed to invest under their mandates, given that Fortescue has yet to produce any iron ore. It's true that meeting the May target for the first ore shipment will require some fast work, particularly on the railway.

But as Fortescue's CFO Chris Catlow says: "We are completely confident of meeting our deadline."

That mood of confidence is evident in the charts and big time clocks ticking down to completion date all over the walls of Fortescue headquarters in Perth's Hyatt centre. It is a deliberately understated and casual workplace, with open-plan cubicles anda determined sense of easy camaraderie.

And now, it is also increasingly evident outside the office that the ability to get the project up, the resources proven, the buyers signed up and the rail and port infrastructure nearly complete in such a short time is a staggering achievement. It can only embarrass the many sceptics who never believed Forrest would ever pull itoff.

Not that they will feel lonely in Australian terms. The reluctance of local investors to get involved at all has been almost universal. One Australian boutique funds manager specialising in Australian equities, Ausbil Dexia, has a relatively large investment. Orion Capital Management also has a significant holding. Another half a dozen local institutions have extremely modest parcels. Other than that, nothing doing here.

Alex Passmore from Patersons Securities in Perth says that, over time, people will come around to the Fortescue story but suggests the lack of local interest compared to the American enthusiasm is partly to do with national business culture.

"The difference is that American fund managers said that Andrew ran into trouble once - he must have learned," he says. "The Australian fund managers looked at his track record and were more cautious."

The problem at Anaconda reflected Forrest's determination to use a new method of treating nickel laterites to leach the ore. It was extraordinarily difficult technologically and had huge teething problems, leading to Forrest's eventual exit as chief executive and the loss of more than $1billion in investors' funds. But it is now a thriving laterite business called Minara Resources. More importantly, the experience helped make Forrest realise the amount of capital available in the US and elsewhere for major projects.

The paper wealth created so far has not all gone overseas, of course. Australia's newest multi-billionaire, Forrest is the largest homegrown beneficiary with 36per cent of the stock. The management speaks for about another 4 per cent. But the other major investors are all from elsewhere. Harbinger Capital in the US owns 16.4 per cent while board member Joe Steinberg holds 9.9 per cent through his US funds management business, Leucadia. Russian steel company Magnitogorsk Iron and Steel has another 5.3 per cent and has an application to the Foreign Investment Review board to go above 15per cent.

But it's only recently that a few more Australian analysts have even started following the stock.

"Australian investors just don't have the risk appetite," says BBY's John Veldhuizen, one of the few who has followed Fortescue and Forrest since early 2005 and will be on Tuesday's trip. "They were getting phenomenal returns from companies like BHP with lower risk. They didn't feel the need."

And still don't. Even BBY has just switched to marking the stock cautiously as a hold rather than a buy. Given that the price has gone up so dramatically over the past few months, they nowawait the actual start of production.

The initial plan was for 45million tonnes per annum, which has now been upgraded to 55mta, and then 100mta as soon as possible and eventually 200mta.

"If you want to project the future, you must look at our track record," Catlow says.

Veldhuizen says he was impressed by Forrest as a true entrepreneur and visionary, despite having gone through the pain of covering Anaconda.

"I thought, gee whiz, this guy had guts and wonderful foresight in picking up these tenements," he says.

Even more so since Forrest's acquisition of tenements was largely done by getting hold of tenements that BHP and Rio had once held but given up. The difference is that the ore lies shallowly across a broader area rather than deep and concentrated, as is typical of the two bigger companies' more conventional mines.

Once again, Forrest introduced another first to get his ore out. Surface miners are usually used in the coal industry. This innovation was something else regarded with suspicion, but is now working even better than hoped, according to Fortescue, leading BHP and Rio to suggest they will investigate the same machinery.

At the same time, the insatiable Chinese appetite for iron ore means that the supposedly lower-grade Fortescue deposits were still being snapped up enthusiastically. In fact, Fortescue disputes any idea that its reserves coming out of the Pilbara are lower-grade, arguing they are actually equal to or higher than 50 per cent of the ore produced by BHP and Rio last year.

At the same time, Forrest infuriated BHP with his attempts to try to force them to open up their rail lines to third parties. He's now asking Rio for the same, given the announcement of another 1 billion tonnes of reserves near Rio's existing railway. BHP has taken the issue to the High Court, with a decision expected midway through next year.

In the meantime, Forrest has simply built his own. Open access promised, of course.

David Radclyffe from Southern Cross Equities also will be on the trip on Tuesday, following the stock after being involved in the capital raising of August 2006.

"We liked the look of the project and the upside," Radclyffe says. 'We think people are now feeling a lot more comfortable that the company will achieve what it says. It will be a significant global player."



















Below is fmg from 10c to 10 dollars










I owned fmg at 100 ( pre 10:1 split ) , so i missed out on a hundred bagger

I owned pdn at 5.6c so i missed out on a 200 bagger


TRH may be a long shot from my 13c entry but I think its the best shot on the ASX for me to get a hundred bagger