SYDNEY, Dec 17 (Reuters) - Fortescue Metals Group Ltd (FMG.AX), whose shares have surged on promises to dig new iron ore mines in Australia, said on Monday it will split its shares one for 10.
The move, following a shareholders’ vote, increases the number of Fortescue shares on issue to 2.8 billion, effective Dec. 19.
The split should improve liquidity and make ownership more popular with retail investors, Fortescue said in a statement.
Although a stock split lifts the number of shares in a public company, the share price is adjusted so the market capitalisation remains the same and dilution does not occur.
Fortescue, vying to become the third miner in western Australia’s iron-ore rich Pilbara region after decades of dominance by Rio Rinto Ltd/Plc (RIO.AX)(RIO.L) and BHP Billiton Ltd/Plc (BHP.AX)BLT.L has made founder Andrew Forrest a billionaire six times over.
Since January, the stock has nearly quadrupled to a high last month of A$64.99. The stock was 0.6 percent lower at A$62.13 in late afternoon trading in step with losses in the S&P/ASX200 index.
Fortescue, like other miners, is facing rising costs for everything from truck tyres to staffing and sees its project costing around A$2.67 billion ($2.3 billion) to complete, up from earlier estimates.
Fortescue hopes to begin shiping iron ore to Chinese steel mills at an initial rate of 45 million tonnes a year starting in mid-May 2008. (Reporting by James Regan)