FMG is unique. Twiggy had a vision to break the duopoly of BHP & Rio in the Pilbara as a major iron ore producer. He achieved his vision on time, 5 years to the day that FMG was created, with mining/railing/shipping of 24mtpa iron ore for a 1 month period on 19/07/08.
Some key milestones in the business plan involved assembling a quality management team, acquiring large tracts of prospective iron ore tenements in the Pillbara, determining the resource, developing the mining plan, achieving sales agreements, and building the infrastructure required. $3.7bn capital was raised, including $1bn equity to finance the project.
Additionally, FMG's top 20 holds >90% of the company. It is extremely tightly held, with relatively little free float for trading. Key factor to aid share price stability.
Management, strategy, execution of the business plan - these are just some of the factors that were essential to FMG's success.
IMO, UMC has a very bright future, although obviously is travelling a different business path to FMG. Proven resource of high grade DSO hematite and access to infrastructure is a very valuable asset, and Railway is only the first of numerous highly prospective targets. Looking forward to the scoping study and any results of progress with meetings for rail infrastructure for the targeted 10mtpa production.
Although UMC's value will continue to be marked down in this bear market, I believe that it's fundamentals will shine through once again with the market recovery, along with many other quality resource companies. No one has a crystal ball on when that will be though :)
Disc: coming up to 2 years hold of UMC :)
cheers Marny
UMC Price at posting:
0.0¢ Sentiment: LT Buy Disclosure: Held
