21/11/2008 - 09:12

FMG up more than 15% in early trading

21/11/2008 - 09:12

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Shares in Fortescue Metals Group jumped more than 15 per cent at market open after the burgeoning iron ore miner announced an increase in exports.

Shares in Fortescue Metals Group jumped more than 15 per cent at market open after the burgeoning iron ore miner announced an increase in exports.

At 1021 AEDT, Fortescue shares had gained 20.5 cents, or 15.5 per cent to $1.495.

"Increasing iron ore sales to China has caused a bit of a rally in Fortescue today, so there is a bit more optimism there for that stock," ABN Amro Morgans Ipswich manager Tony Russell said.

At the Perth-based mining group's AGM, held at the Hyatt yesterday afternoon, FMG's chief executive, Andrew Forrest said it will boost its iron ore exports after amending its contract with a major Chinese steel mill and buying back about $100 million in debt at a substantial discount.

The company said it had delivered a $360 million trading profit for the third quarter and indicated that a Chinese sovereign wealth fund could buy a stake in the miner.

The steel maker involved in the expanded contract was identified only as one of China's "Top 5 steel mills".

Fortescue refused to say more for reasons of commercial confidentiality.

Mr Forrest, who toured China last week, outlined three and a half million tonnes in increased purchases of iron ore from FMG was on the cards.

During his time in China he concluded a variation agreement to enhance an existing long term contract with one of these top-five steel mills.

This variation provides for a 3.5 tonne increase in purchases of FMG iron ore by this mill over the next calendar year.

The enhanced, ten-year contract has now been amended by the parties, with the customer committing to take deliveries of up to 5.5 million tones per annum over the calendar year 2009, as FMG ramps up to the production rate of 55 million tonnes per annum during that time.

Likely buyers include Tangshan Iron and Steel Group and Baosteel.

 





 

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