we are all doomed says big mac, page-12

mad
and now read this. not my opinion, from citigroup of today..they have a SELL on FMG with a tgt of $8 plus something .
please check yourself.

Fortescue Metals Group Ltd (FMG.AX)
Blue Sky Priced In
ƒæ Iron Ore Settlement ¡X Rio Tinto has settled iron ore prices with Baosteel at
+80% for fines and +96.5% for lump, in-line for fines but higher than our 85%
for lump. Modest uplift from lump settlement has been offset by a higher A$ in
FY09 and our estimate is downgraded 3% to A$840m. In FY10 our earnings
estimates have increased by 4% to A$2,540m.
ƒæ What is Priced In ¡X Our A$6.40 NPV assumes a 50% probability of expansion
to 110mtpa, +30% for the 2009 settlement (roll-over for 2010 & 2011) and a
long-term price of US$60/t. To get NPV to share price, we¡¦d have to assume a
more than doubling of existing resources, 100% conversion to reserves and all
expansions to 200mtpa. That does not appear to leave much blue sky.
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