The iron ore producer’s shares are down 0.2% to $ 16.92 at the time of writing.
What did Fortescue announce?
This morning the mining giant announced that it would continue to buy back shares for the foreseeable future.
According to the press release, Fortescue has further expanded its buyback in the market as part of its ongoing capital management program.
The buyback period will now continue indefinitely, with the maximum number of shares that can be bought back being regularly set by the company’s 10/12 limit.
The 10/12 limit is defined in Section 257B (4) of the Corporations Act 2001 and limits the company to repurchasing no more than 10% of its voting shares within a 12 month period.
However, that doesn’t necessarily mean the company will buy back 10% of its stock every year.
Management advised: “The number of shares purchased and when to buy back will depend on Fortescue’s share price and market conditions at that time. Fortescue reserves the right to change, suspend or terminate the repurchase at any time. ”
Bankers at Macquarie Group Ltd. (ASX: MQG) have been engaged to buy shares on behalf of Fortescue.
What’s next for Fortescue?
Fortescue has just closed its first quarter and will be keeping the market updated on its performance towards the end of the month.
According to a release from Goldman Sachs last week, the company is expected to report iron ore shipments of 42.5 million tons.
While this will be a 10% decrease from supplies in the fourth quarter, it will be a 1% increase from the previous corresponding period.
One metric the broker expects from quarter to quarter is the price it charges for its iron ore. Goldman estimates that Fortescue will have an average realized price of $ 102 per ton. That’s 87% of the benchmark iron ore price with 62 fines and a 27% increase from $ 81 per ton in the fourth quarter.
Goldman Sachs has a neutral rating and a target price of $ 16.80 on the company’s stock.
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Returns from October 6, 2020
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