PhillipCapital’s Vivian Ye has maintained her “buy” call on Fortress Minerals (FML) with a higher target price of 47 cents, up from the previous figure of 28 cents.

She noted that FML’s 3QFY2021 results beat her expectations as the quarter’s revenue surged 150.9% y-o-y while profit after tax and minority interests (PATMI) spiked 477.9% y-o-y. 

3QFY2021 operating cash flow also increased, with the figure of US$11.7million ($15.5 million) about seven times the US$1.6 million achieved a year ago. 


See: Fortress Minerals reports 477.6% higher 3QFY2021 earnings of US$4.3 mil due to higher revenue and 'favourable operating environment'


Meanwhile, she also said 3QFY2021 sales volume for iron ore also increased by 93.8% y-o-y on the back of increased domestic demand for steel.

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However, on a q-o-q basis, volume and revenue were both lower, due to monsoon disruptions to production that typically occur at year-end.

Ye also highlighted that gross margins increased from 57.7% to 75.1% in 3Q2021. Revenue for the quarter more than doubled, driven by higher prices for high-grade iron ore concentrates.

Average selling prices reached a record US$110.06 per dry metric tonne (DMT) as iron ore prices reached a 7-year high. This was coupled with the average unit cost being lower y-o-y through increased iron ore production.

More notably, Ye highlighted that FML has entered into a conditional sales and purchase agreement with Canadian gold producer Monument Mining for the acquisition of the entire Monument Mengapur (MMSB). 

MMSB owns a 100% stake in the Mengapur copper and iron project in Pahang, Malaysia, and FML will pay a royalty fee of 1.25% of gross revenue from all products produced at Mengapur to Monument Mining.

With this acquisition, FML’s magnetite resources will surge from 7.18 million tonnes from its Bukit Besi mine as of February 2020 to 17.93 million tonnes.


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Mengapur is also strategically located 65 km away from the Kuantan port, the main bulk iron ore export port on Malaysia’s east coast. It is also within close proximity of the two largest steel mills in Malaysia, both of which are FML’s customers. 

Ye said if this acquisition is executed according to plan, it should help transform FML into a regional player in iron ores, coupled with its efforts to explore and develop iron ore assets across Malaysia. Mengapur should also complement FML’s existing portfolio of advanced iron ore projects.

Separately, she expected that “iron ore prices are expected to taper down in 2021 as supply balances out demand. We expect them to drop from the current US$190 per DMT to the region of US$110/DMT.”

This would translate to lower ASPs of US$95 per DMT for FML, from US$110.06 per DMT in 3QFY2021. 

However, FML’s revenue should still increase with higher iron ore volumes sold following its announcement of an offtake agreement in September 2020. Operating expenses are also expected to be stable with the help of improved economies of scale.

As at 2.32pm, shares of FML were trading at 32 cents, with a FY2021 dividend yield of 2.7%.