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FMG flags $3.4bn earnings for next financial year

Kate Haycock
Friday, 27 June 2008

FORTESCUE Metals Group has revealed its projected earnings for the next financial year, flagging $A3.4 billion in earnings as iron ore prices soar.



Andrew Forrest celebrates the first shipment of ore from Port Hedland.


Andrew Forrest celebrates the first trainload of ore to leave FMG's Cloudbreak operations in the Pilbara

FMG’s chief financial officer Chris Catlow told AAP the company expected to make around $3.4 billion earnings before interest tax depreciation and amortisation in the next financial year.

The company has a major offtake deal with Baosteel, which earlier this week agreed to a significant price hike with iron ore miner Rio Tinto.

Pilbara blend fines and Yandicoogina fines will now be priced at $US145 ($A152) per dry metric tonne unit, a rise of 79.88%, while Pilbara lump blend will be priced at $US202/dmtu, a 96.5% gain.

Meanwhile, Brazilian miner Vale's prices for its Southern System fines are now at $119/dmtu and $125 for higher quality Carajas fines.

Catlow told AAP FMG expected Rio’s prices to set the benchmark for FMG’s iron ore exports to Baosteel.

He also said mining costs for the project were coming in at around $A20 per tonne and the company was selling iron ore at around $90/t.

MiningNews.net called FMG for more comment but was unable to reach a representative this morning.

FMG is initially targeting a 55 million tonne per annum operation in the Pilbara, which will be further expanded to 100Mtpa and could increase to 200Mtpa once its next major iron ore region, Solomon, is developed.

The company has yet to announce whether it has reached its official annualised target mining rate, but last week MNn spoke to the company, which said its surface mining technology was progressing better than expected.

Shares in FMG were last trading at $11.68, down over 3.6% or 44c this morning.

Meanwhile, FMG chief executive Andrew Forrest has also gifted away 2.4 million (around $28 million worth at current prices) of his 1 billion shares in FMG to an unknown recipient.

Forrest’s philanthropic efforts in the past year have seen him give away millions of dollars worth of cash and shares to children’s and Aboriginal health in Western Australia.