Fortescue Metals Group Ltd
(ASX:FMG) has confirmed a cost blowout at its Solomon project in West Australia.
The company’s shares went into a trading halt yesterday pending an announcement by the company.
Speculation grew that the iron ore miner was to announce a US$2 billion cost blowout at its Solomon project, after it was revealed to potential overseas investors in its US debt raising that the first stage of the project would cost US$5.4 billion.
This compares to previous guidance of that it would cost an estimated US$3.24 billion.
In a statement to the ASX Fortescue says that the US$5.4 billion figure is consistent with media and analyst commentary that capital cost guidance for the expansion of the Solomon project, from 55 to 155 million tonnes a year, would cost around US$80 a tonne.
In response to why it did not inform shareholders of the expected cost blowout, the miner says as previously advised the board will consider the feasibility study for Solomon Stage One in November, with further information provided after that.
Fortescue Metals Group posted a profit of $681.62 million for the year to June 30, 2010.
