Fortress Minerals Limited (FMIL SP): Rebounding iron ore prices
- BUY Entry – 0.49 Target – 0.60 Stop Loss – 0.44
- Iron ore play. Fortress Minerals engages in the exploration, mining, production, and sale of iron ore concentrates.
The company is also involved in the wholesale trade of various goods; transportation of iron ore and minerals; rental of transport equipment and vehicles; extraction, dredging, and dealing of industrial sand; acquisition of mines, mining rights, metalliferous land, and quarries; and provision of supporting services for transport equipment and vehicles. It sells its iron ore concentrate primarily to steel mills in Malaysia. The company also exports its products to China and Vietnam.
- Recovery in iron ore prices. Iron ore prices rose for the week as the war in Ukraine and recovering Chinese demand drove prices higher.
Iron ore on the Singapore Exchange April 62% Fe futures settled near US$160/t. Chinese port data showed that iron ore inventory slipped 430,000 tonnes to 153.6mn tonnes.
Blast furnaces have been building stocks as restrictions around the Winter Olympics have eased.
The ongoing war and limited prospect for an immediate resolution may mean that iron ore prices may be supported for some time.
Set to benefit. Fortress Minerals reported disappointing 3QFY2022 results, where net profit declined 35% YoY to US$2.8mn due to lower selling price.
The group achieved an average realised selling price of US$87.44 in 3QFY2022 vs US$110.06 in the prior year period.
However, we expect this decline to reverse in the next quarter due to rising iron ore prices.