As one of the most leveraged ASX listed companies to iron ore prices -- and with prices forecast to rise next year--Portman Ltd is facing 2005 in the driver's seat. The West Australian-based company recently announced an expansion at its Koolyanobbing mine in WA to 8 million tonnes per annum. In a report on the company by Patersons, in which the stock was given a "buy" recommendation, it was predicted cash operating margins at Koolyanobbing would increase by around 30 percent next year. This was based on the likely price increases for iron ore, a reduction in unit cash costs from major contract negotiations and an expanded production base. Patersons also predicted the iron ore price would rise by 20 percent next year based on the current demand/supply imbalance as well as the performance of coking coal this year. The broking house believed further upside in the Portman stock would be driven by corporate activity -- involving either Consolidated Minerals Ltd or another party. "We believe Portman presents as an attractive proposition to overseas iron ore producers given the current high freight rates and its close proximity to Chinese markets," analyst Alex Passmore said.
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