Low Grade Ore Discounts Take Gloss From Fiscal 2017 for Fortescue
We lower our fair value estimate to AUD 3.20 from AUD 3.30 per share after cutting our near-term earnings forecast. Iron ore price realisations disappointed in the third quarter. The company sold ore at an average 10% discount to the 62% benchmark for the 18 months ended December 2016. However, for the March quarter, the discount more than doubled to 24% with Fortescue realising USD 65 per dry tonne versus USD 86 per tonne for the 62% index. The larger discount reflects steel mills optimising fo...Fortescue Metals Group is an iron ore producer. As of June 30 2016, Co.'s operations had four mine sites in the Pilbara. The Chichester Hub, which includes the Cloudbreak and Christmas Creek mines, is located in the Chichester Ranges and the Solomon Hub, in the Hamersley Ranges, includes the Firetail and Kings Valley mines. Co. owns and operates an integrated supply chain including its Herb Elliott Port in Port Hedland and a heavy haul railway with over 620km of track. As of June 30 2016, Co.'s total hematite ore proved and probable reserves were 2.17 billion tonnes. Also, as of June 30 2016, Co.'s total magnetite ore proved and probable reserves were 705.0 million tonnes.
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