RodI do not suggest that this is a safe stock...far from it. But...

Rod
I do not suggest that this is a safe stock...far from it. But to say it will "implode" in 5 years with a 50% assurity is frankly absurd in my eyes. Where are you getting this from? Your shorters handbook perhaps??? Also what about the varying percentages of the SP dropping below $3, $2...what is this based on other than plucking a number?

FMG may be getting a bit big for their boots and further expansions (over the 155mtpa) would scare me, but the debt will be paid off in the short term. Hell as at March 2012 they had $3.2 billion in cash at bank.

As for what Mike mentioned regarding costs, the aussie iron ore exporters are the world's cheapest. Chinese largely has a cost over $100/mt. I recognise that there is more stock coming on, growth is slowing etc etc. But unless there is significant Govt intervention overseas or here (to increase our costs or decrease theirs), the iron ore has to come from somewhere. There will be demand at some level. And where will it come from??? Most likely from the cheapest producers as they can do two things:
1. Reinvest profits to further cut down on costs.
2. Provide lower costs to push out smaller operators.

In the shorter term i agree, given the mkt sentiment this could go down towards $4 (perhaps sub). there is every chance it doesn't though. a lot of the "one trick pony" risk is accounted for in the share price. if FMGkeeps doing what it has been in the past, it might be the best performing stock of this decade as it was last (tongue in cheek, i wish)!