FMG is out with its Q3 production report this morning and when it rains it pours:
Fortescue has released its March 2017 quarterly production results, reporting shipments of 39.6 million tonnes of iron ore. Cash production costs (C1) were US$13.06 per wet metric tonne (wmt), a 12 per cent improvement over the prior comparable period and four per cent higher than the December 2016 quarter due to wet weather impacts on production and shipments. During the quarter Fortescue repaid a further US$1.0 billion of debt, reducing gross debt to US$4.3 billion, inclusive of US$0.7 billion of finance leases with US$1.5 billion cash on hand at 31 March 2017. This debt reduction has lowered gross gearing to 31 per cent with net gearing of 22 per cent. Chief Executive Officer, Nev Power, said “Our teams continued to deliver excellent results with improved safety performance and operating margins compared to our first half results. The average realised iron ore price of US$65 per dry metric tonne with a C1 cost of US$13.06/wmt generated strong cash flows which were applied to a further US$1.0 billion debt repayment in March.” “We remain on track to deliver our guidance of between 165 and 170 million tonnes for the full year at a C1 cost of US$12-13/wmt and will continue our focus on further repayment of debt, investment in our core iron ore business and returns to shareholders.”
Iron ore and steel demand remained strong during the March 2017 quarter driven by ongoing construction and infrastructure activity in China Customers have continued to bid-up the price of higher grade ores to offset the impacts of coking coal prices, restrictions on steel mill production and to take advantage of high steel margins.