Iron ore revaluation may have caused share spike: FMG

An almost 30 per cent rise in the share price of iron ore hopeful Fortescue Metals Group Ltd over the past fortnight could be attributed to recent upward projections in iron ore prices for the 2008-2009 financial year, the company told investors today.

While re-iterating its claim that it was not aware of any reason for its marked improvement, from $17.50 on March 9 to $22.70 at close of trade today, the company nonetheless indicated a number of general reasons that it said may have contributed to the rise.

As well as the improved iron ore price, the company said in an announcement that the company had been admitted to the mid-cap FTSE All World Index, which it said may have led to an increase in buying from index funds.

Finally, the company said a general re-rating of the iron ore sector would lead to re-rating of its own stock as the company implemented its Pilbara Iron Ore and Infrastructure project.

The full text of a company announcement is pasted below

Fortescue Metals Group Ltd would like to comment on the recent increase in its share price over the last week. As stated in the release made last Friday, Fortescue is not aware of any specific reason why its share price has appreciated so strongly during the last week. The company remains in compliance with its continuous disclosure obligations.

There are however a number of general reasons that may be contributing to an overall increase in buying interest toward Fortescue stock and these are;

Fortescue continues its practice to negotiate with various parties in regard to its normal course of stated business objectives. If such negotiations are from time to time concluded, they may lead to agreements which would have a material impact on the Company and
therefore , need to be disclosed to the market. At this stage none of the negotiations are concluded and they remain incomplete and confidential.