At time of writing, Fortescue Metals Group Ltd [ASX:FMG] shares are up 3.55%, sitting at $3.94 today on the back of strong volume.
Fortescue is a mining company specialising in iron ore, and has operations based in Western Australia.
So far it has been a tough year for Fortescue, down 21.2% for the year:
Share buy-back could signal a turnaround for Fortescue’s share price
Last Thursday Fortescue announced a share buy-back program to take advantage of its improved balance sheet.
The program will remain in place for the next 12 months.
It is able to operate because Fortescue has recently paid out $10.4 billion in debt.
The ratings agency Fitch anticipates that the program will not require any additional debt.
Share buy-backs are a way for a company to invest in itself and improve its share price.
Rising iron ore price helps Fortescue’s share price
Even though iron ore prices have been rising steadily since July, investors have been slow to buy Fortescue.
In September, Fortescue started to turn the corner. However, by looking at the charts you can see that it is still volatile.
It could stand to benefit from renewed growth in Chinese steel production as it is ‘the lowest cost seaborne provider of iron ore into China’.
If iron ore prices rise further, Fortescue could be in a much stronger position than the start of the year.
Now might be a great time to look at mining stocks.
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