Differing fortunes for mining behemoth Fortescue and local medi-tech company ALS on Wednesday, with operational dramas at the former and a slight earnings upgrade from the latter.
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A last-minute setback for Fortescue Metals Group (ASX: FMG) at its troubled Iron Bridge magnetite iron ore mine in the Pilbara with another (small) delay revealed and confirmation of the project’s final cost at $US3.9 billion.
Fortescue says first production at the Iron Bridge Magnetite Project has been revised to the second half of April and the cost overrun is now put at 50%!
Fortescue had said in an announcement in January that first output was expected by the end of March. That has now been delayed by two weeks or so.
That’s because of wet weather and delays in finalising the construction and testing of water supplies and other infrastructure.
In reality the start date is close to a year behind the original target of mid 2022 while the cost for Fortescue (69%) and Formosa Steel of Taiwan (31%) was originally estimated at $US2.6 billion.
The company said in January the eventual cost would be towards the higher end of a $US3.8 to $US3.9 billion range. This week’s announcement said the cost would be $US3.9 billion which makes the cost overrun 50%.
Delays and cost surges have bedevilled the Iron Bridge project, which saw the exit of its chief operating officer Greg Lilleyman and two other executives in 2021.
The Iron Bridge will allow Fortescue to blend high-grade output (67% Fe magnetite ore) from the project with its typically lower grade ore (around 58% Fe), raising average quality above 60%.
This will allow Fortescue to better compete with larger rivals BHP Group and Rio Tinto with sell higher quality ore, especially Rio with its benchmark Pilbara fines blend and its 62% Fe content.
Iron Bridge will probably be the final mine Fortescue starts for a while. It’s other newish mine Eliwana started producing around late 2020 at a cost of $US1.3 billion. Its main product is a 60% Fe fines ore.
Fortescue shares rose 2.9% to $21.16.
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Brisbane based global testing group ALS Ltd (ASX: ALQ) has upgraded its underlying 2023 earnings in a filing with the ASX.
ALS says it now expects its 2022-23 underlying net profit after tax to be between $312 million and $322 million, up slightly from the previous range of $300 million to $320 million.
“The upgraded guidance to the previous range’s top end reflects the underlying strength of the Company’s balanced portfolio and its leverage to resilient key end markets that are supported by strong growth drivers,” ALS said in its ASX release on Wednesday.
“Economic headwinds continue to be well managed through price and cost discipline and with an emphasis on cash flow generation, all whilst operating within our target gearing range.”
ALS is due to release its full year result on Monday, May 29.
The company said its balance sheet “is well positioned and following receipt of the proceeds of sale from the Asset Care business and has approximately $400 million of available liquidity (as at March 1, 2023).
ALS said it received $80 million for the sale of its asset care business to SRG Global.
“The transaction was an important milestone for the Company’s overall portfolio re-alignment strategy, consistent with the 2027 strategic vision.
“The proceeds have been incorporated into the Company’s capital management framework, underpinning the strong balance sheet and re-allocating capital to higher growth end market opportunities,” ALS said.
ALS shares jumped nearly 5% to end at $12.10 on Wednesday.
