Fortescue has confirmed it is on track to hit the top end of its iron ore export guidance and possibly exceed it.
And while it repaid another $US1 billion off its debts in the three months to December, it also cut its basic operating costs to below $US13 a tonne for the first time.
The shares were up more than 2.7% to $6.66 yesterday in the second day of weak trading on the ASX.
The company, world’s fourth-biggest iron ore exporter said shipped 42.2 million tonnes of iron ore in the three months to December 31, barely changed from the 42.1 million tonnes volumes it recorded a year earlier. Shipments were down 4% on the September quarter.
The company also trimmed cash production costs to $US12.54 per wet metric tonne – its 12th straight quarter of cost cuts – and repaid a further $US1 billion ($A1.32 billion) in debt.
Chief Executive Officer, Nev Power, said “Fortescue has delivered another strong quarterly result, achieving improved safety performance, consistent production and sustained cost reductions across all of our operations. Through continued focus on efficiency and productivity initiatives, C1 costs were lowered for the 12th consecutive quarter to US$12.54/wmt.”
“Our strong operating results together with positive market conditions have generated excellent cash flow which supported a further US$1.0 billion of debt repayments in December. Initial gearing targets have been surpassed and it is pleasing to see the ratings agencies recognise our performance and upgrade their ratings and outlook accordingly.”
The company has exploited a rebound in iron ore prices to quickly reduce its massive debt pile to below $US6 billion, which has seen ratings agencies upgrading its credit rating.
Iron ore prices slumped to a decade low of $US38 a tonne in late 2015, but rebounded 81% last year to around $US82 a tonne and have maintained that evel now for the first month of 2017.
The company said it held $US1.2 billion in cash at December 31, while net debt stood at $US4.0 billion. The miner maintained its 2016/17 shipment guidance of 165-170 million tonnes.
The December quarter numbers means Fortescue has produced 86 million tonnes in the first half, and if repeated in the six months to June 30, F will see it beat the top end of its guidance range of between 165 million and 170 million tonnes.
