The Fortescue (ASX: FMG) share price is flat after announcing more details for its Iron Bridge magnetite project.
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Fortescue Metals Group Ltd (ASX: FMG) announced an update for its Iron Bridge Magnetite Project today. The Fortescue share price opened strongly this morning, pushing 2.55% higher to an intraday high of $22.84. However, its shares have given back their gains, currently trading at $22.32, 0.22% higher.
Fortescue share price flat on Iron Bridge update
Fortescue’s Iron Bridge project has raised questions in the past due to potentially higher than expected capex expenditure. As well as the company’s leadership change in February which saw the resignation of its project director, Manie McDonald.
Today, investors will receive greater visibility into the project after the completion of both technical and commercial assessments.
Fortescue reports that the Iron Bridge project is expected to deliver 22 million tonnes per annum (mtpa) of high grade 67% Fe magnetite concentrate. To add some perspective, the company mined some 204.3 million wet metric tonnes (wmt) of ore in FY20. First production is expected to take place by December 2022 and ramp up to full production rate over the next 12 to 18 months.
The company has made a number of strategic investments to enhance the product range, increase production and shipping capacity to meet today’s strong demand for iron ore.
Fortescue estimates that it will need to front up its share of US$2.5 billion to US$2.7 billion of the total US$3.3 billion to US$3.5 billion of capital expenditure. The update also flags that the joint venture has incurred capital expenditure of US$1.5 billion as at 30 April 2021, with Fortescue’s share of US$1.3 billion.
The project is expected to diversify Fortescue’s product mix, bringing on board 67% Fe content low impurity concentrate. This compares to the lower grade iron ore that Fortescue is usually known for.
From a cost perspective, the mine possesses a competitive cost structure with life of mine C1 cost estimates of US$33 to US$38 wmt.
Fortescue CEO Elizabeth Gains said Iron Bridge was well positioned to meet market demand and deliver strong returns for the joint venture and stakeholders.
The iron ore market fundamentals support the investment in the Iron Bridge project, and we anticipate strong demand for this high value-in-use product, which will attract a premium to the Platts 65% Fe CFR Index.
Led by our highly experienced project team, completion of the technical and commercial assessment of the Iron Bridge project has confirmed the optimal transportation solution, while also addressing contractor and logistical constraints, managing capital costs and confirming first production by December 2022.
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