Well according to some brokers FMG's breakeven is US$75. Spot went below that.
If iron ore bounces FMG is the buy of a life time. If it stays sub US$70 then FMG is probably in serious trouble. Restructure, equity raising etc etc.
Generally in a market crash one buys blue chips. Not highly leveraged miners with a single commodity focus. Especially a commodity where it is no where near the bottom cost curve.
Even a few dollars below FMG's all in cost is seriously damaging to the company since it producers so much ore. i.e. 150mt x $5 = $750m hole, plus you need to factor in additional cash flow required for debt repayments (excluding a capital raising/restructure).
FYI I am not short. I missed this opportunity on Tuesday (got called away from my computer when FMG was about $3.15-$3.16).
Goodluck guys, but remember FMG did a massive capital raising to the Chinese when it was sub $2 as well. IMO its best to buy if iron ore goes back to US$80 or at least the AUD plummets.
High risk/high reward.
FMG Price at posting:
$2.74 Sentiment: None Disclosure: Held
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