what is happening with fmg, page-62

blackballed

Well all I can say is that it is your money and what you do with it is up to you but I for one would counsel caution.

We could be seeing something of a dead cat bounce here in fmg's share price.

Remember before making any investment decision in regard to Fortescue a few of these facts.

Having seen the share price collapse 89 per cent since June — Fortescue lost another 16 per cent during last week to close at $1.35, near a two year low {before recovering to $2.06 Friday close} — shareholders have become increasingly worried about Fortescue’s health in light of a sudden drop in Chinese iron ore demand and costly production delays in the Pilbara.

Fortescue admitted earlier this month it would not meet its target of selling 22 million tonnes of iron ore by December 31, partly because of operational problems at its Pilbara mine but also because Chinese buyers were less interested in its product.

The reduced production forecast will curtail Fortescue’s cash flow at a time when external capital markets have dried up, jeopardising the miner’s ability to fund its much-needed expansion plans internally.

Mr Forrest has tried hard to allay concerns about Fortescue’s cash flow position although his reassurances have failed to arrest the slump in the miner’s share price. As Fortescue’s biggest shareholder, with a 36.5 per cent stake, Mr Forrest has more riding on the miner’s well-being than most, although fellow director Joseph Steinberg, who has agreed to have his $125 million loan to the miner repaid with iron ore sales royalties, is also staring at a much slower than expected payback period.

Source; The West Australian

http://www.thewest.com.au/default.aspx?MenuID=3&ContentID=109006