twiggy santa all the way hey!!!, page-6

fmg reday to rock and roll
Forrest's ready to roll in Pilbara
Robin Bromby
December 24, 2005
SOME time in the next six months, the arrival of a dredge off Anderson Point at Port Hedland will signal the moment that Andrew Forrest's Pilbara iron-ore dream starts to become a reality.

That dredge will be put to work deepening the harbour at the place where Forrest's Fortescue Metals Group plans to build its berth, the first part of its $1.95 billion Chichester Ranges project.

The noise of the dredge will also drown out the sound of grinding of teeth from the executive suites at BHP Billiton and Rio Tinto: the last thing the Pilbara iron-ore duopoly wants to see is another player they can't control.

FMG yesterday wrapped up its final pre-Christmas business with the announcement that it has signed another five Chinese steel mills to take the mine's output. The new signings cover five million tonnes a year - this means FMG now has contracts covering 30 million tonnes of its planned 45 million tonnes a year production.

A further 9 cent gain before the market closed for Christmas put FMG shares at $5.63 - a 12 month high that left Mr Forrest once again running a company capitalised well over $1 billion. In fact, it was worth $1.25 billion at yesterday's end of trading.









Things are looking a bit better than they were mid-year when, after having for the first time topped $1 billion, FMG hit the skids, its shares falling as low as $2.32 in June.

The initial cause of the tremors was a falling out with Chinese partners. Mr Forrest seemed to have watertight agreements with the Chinese, who would finance and build his mine, railway and port. But the agreements were only preliminary, and the Chinese wanted more of FMG than Mr Forrest was prepared to yield. The disclosure that "binding" agreements were no such thing shook investor confidence mid-year.

All this is behind the company now, it seems.

Chief financial officer Chris Catlow said construction start-up was planned for the first half of 2006, with the company aiming for the first quarter.

"We're very close to having all the boxes ticked," he said.

Detailed financial planning was under way with advisers Citigroup, and the company was close to kicking off its financing and equity programs.

FMG had, in its back pocket, all the necessary native title agreements, the state mining agreements, and all but one of its environmental approvals.

Last week the West Australian Government gave the all-clear for mine development at both Christmas Creek in the Chichesters, and at Mindy Mindy near BHP's Newman mine. The clearance for the railway line has been received, and FMG expects the tick for development of its Cloud Break deposit in early 2006.

The latest reserve estimate for Christmas Creek and Cloud Break came in at 1.07 billion tonnes, with 359 million tonnes of that being direct-ship iron ore - that is, ore that does not need upgrading before being exported.

Dredging at Port Hedland will enable construction of the company's berth, over which all the equipment for the railway and mine will arrive.

Twenty-two months after the dredge arrives, the mine should be commissioned. First ore railed late 2007, full production of 45 million tonnes a year in 2008.