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Investing.com - Jefferies raised its price target on Fortescue Metals Group Ltd. (ASX:FMG) (OTC:FSUGY) to AUD18.00 from AUD17.50 while maintaining a Hold rating on the stock.
The price target increase follows the inclusion of the Blacksmith Project into Fortescue’s Hematite life of mine plan, which Jefferies notes significantly reshapes the project’s economics for the iron ore producer.
According to Jefferies, the Blacksmith Project will deliver lower strip ratios, though this comes with lower product grades for the mining company.
The investment firm expects improved free cash flow generation for Fortescue over the medium term as a result of these operational changes.
Jefferies also observed that Fortescue’s decreasing emphasis on green investment expenditures concentrates investor exposure to iron ore earnings.
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