The Fortescue Metals Group Limited (ASX: FMG) share price is under the spotlight as the miner is due to hand in its FY22 result on Monday.
At the time of writing, Fortescue shares are up 2% at $19.55. That compares to the S&P/ASX 200 Index (ASX: XJO), which is currently up 0.97%.
As a resources business, the ASX mining share's prospects are significantly linked to the movements of iron ore. It's one of the biggest iron ore miners in the world. In the short-term, if the iron ore price rises, then the Fortescue share price can react positively. If the iron ore price falls, Fortescue shares could fall as well.
What happened overnight with the iron ore price?
According to Commsec, the iron ore futures fell by US 19 cents, or 0.2%, to US$104.96.
What do we already know about FY22?
Fortescue told investors about several things in its production report. The one released last month showed how it performed in the three months and 12 months to June 2022.
the company advised that it shipped 189 million tonnes of iron ore, which was 4% more than last year.
The C1 costs, the mining costs, increased by 14% to US$15.91 per wet metric tonne (wmt). In the fourth quarter of FY22, the C1 cost of US$17.19 per wmt rose 9% compared to the previous quarter due to higher diesel costs, labour rates and other consumables.
Fortescue said that the FY22 C1 costs meant it still had an industry-leading cost position, supported by "an ongoing focus on productivity gains through innovation and technology".
It told investors that it achieved average revenue of US$108 per dry metric tonne (dmt) for the quarter and average revenue of U$100 per dmt in FY22.
Fortescue has also revealed how its balance sheet was positioned at 30 June 2022. It had cash on hand of US$5.2 billion and net debt of US$0.9 billion. That compares to net debt of US$2.4 billion at 31 March 2022.
CommSec, there is an estimate that Fortescue is going to generate earnings per share (EPS) of $2.91 in FY22 and pay an annual dividend per share of $2.07. This would mean the Fortescue share price is valued at under 7x FY23's estimated earnings with a projected grossed-up dividend yield of 15%.
Forecast for FY23
Fortescue has provided guidance for a few different elements of FY23.
It expects to ship between 187mt to 192mt including approximately 1mt from the Iron Bridge and Pilbara Energy Connect (PEC) projects.
The C1 cost for hematite of US$18 to US$18.75 per wmt.
In terms of capital expenditure, Fortescue said it was expecting capital expenditure to be between US$2.7 billion to US$3.1 billion, excluding Fortescue Future Industries (FFI).
FFI is expected to spend between US$600 million to US$700 million, including US$100 million of capital expenditure and between US$500 million to US$600 million of operating expenditure.
