Fortescue Metals Group Limited's (ASX: FMG) shares have soared today after the company increased its estimate regarding how much iron ore one of its projects in Western Australia holds.
The shares soared 21c or 4.8% to trade at $4.58 each. Although the shares are still well below their price from the beginning of the year (21.5% below $5.82), today's gain will come as a small victory for shareholders who have no doubt been concerned about the declining iron ore price.
In an update to the market this morning, Fortescue added 1.16 billion tonnes to its Greater Solomon mineral resource, reflecting a 77% increase. Fortescue now believes it holds a total of 2.66 billion tonnes, while the total mineral resource held in the company's Solomon Hub (which includes its Firetail and King's Valley project) is estimated at more than 4.5 billion tonnes.
Fortescue's two larger rivals Rio Tinto Limited (ASX: RIO) and BHP Billiton Limited (ASX: BHP) have also managed to scrape into the black today, with both stocks up 0.1% each.
A better bet than Fortescue
Although the news is certainly a positive for shareholders, I just couldn't put my faith behind the company. While the company remains far too reliant on iron ore for its earnings, I'd much prefer to invest my money somewhere much more promising.
