Strong First Quarter Volumes for Fortescue Sees Fair Value Lift to AUD 1.70 per Share
We raise our fair value estimate from AUD 1.60 to AUD 1.70 per share following first quarter fiscal 2017 production. The elevated near-term iron ore price, coupled with relatively strong production, drove higher cash flows than we previously expected. Based on an iron ore price of USD 55 per tonne, near the spot price, we estimate Fortescue can generate annual earnings of approximately USD 0.40 per share. For each quarter the iron ore price remains at that level, it adds approximately USD 0.05 p...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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