Will FMG be taken oven?, page-54

Waikakamu - i believe you are wrong on that.

FMG breakeven was ~$71/t on a 62.5%Fe basis for all costs, inclusive of transport last ppt i read (ie they are actually lower cost than that per tonne but they have lower grade material.. I believe they use a 10% discount to calculate the effective breakeven. )

Of that my understanding is that around $15-20 per tonne is in finance costs of p&i for the debt.

You will notice that FMG's reported all in cost keeps dropping each half yearly report - thats because they are paying down their debt ahead of time.

This is the unique aspect of FMG that most people dont seem to understand or forget no matter how often it is explained.

As a result people continue to think FMG is a higher cost miner than it really is.

Effectively FMG is only slight above BHP in operation and admin costs - ex finance costs.

The debt does represent a threat oif course - if for some reason FMG couldnt repay out of cashflow or successfully refinance before the 2017 milestone repayment date.

But equally it means FMG's share price is cheaper than its intrinsic competitiveness should make it.

its the natural takeover target in the market as a result - for anyone with the stomach to take on the debt, or a cash pile that can expunge it.

i know what I;d be doing if i was Vale.