The news continues to improve for Fortescue after the pure play miner this morning said it expects to raise half a billion dollars more than originally planned.
The world's fourth biggest iron ore miner now expects to raise $US5 billion, up from $US4.5 billion, from its new credit facility due to strong demand and "attractive terms”.
It’s good news for the WA giant as it gives it further flexibility to ride out the volatile iron ore environment and means the company won’t be under any pressure whatsoever in terms of asset disposal. And if it does decide to go down that path, it definitely won’t be a forced seller which many people had been worried about.
Fortescue plunged in early September as iron ore prices came under heavy selling pressure, eventually bottoming at $US86/t. Since then, it has rebounded hard to be sitting around the $US115/t level.
The market likes the news too, with the stock currently 1.3 per cent higher at $3.80 in early trading.
Source – Bourse Data
From a price action point of view, the above chart shows the market perception of the stock is changing for the better. The stock has broken out above the blue short term downtrend line and looks to be stabilising there.
It’s also holding above the yellow support line which is encouraging and indicates the stock is now at the start of a new uptrend. Based on this we would expect the stock to push higher towards the psychologically important $4 level.
MARKETS SPECTATOR: Fortescue's extra flexibility
Fortescue has enjoyed another good turn with the miner now expecting to raise an additional $500m, giving it extra cushioning against any more iron ore spot price shocks.
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