Fortescue Metals looks set to achieve its full-year guidance after outlining steady iron ore shipments and further cost cuts in the December quarter.
The world's fourth-biggest iron ore exporter 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 per cent on the September quarter.
The company also trimmed cash production costs to $US12.54 a wet metric tonne - its 12th straight quarter of cost cuts - and repaid a further $US1 billion ($1.32 billion) in debt.
"Our strong operating results together with positive market conditions have generated excellent cash flow which supported a further $US1 billion of debt repayments in December," chief executive Nev Power said in a statement on Tuesday.
The company has exploited a rebound in iron ore prices to quickly reduce its massive debt pile to below $US6 billion, prompting ratings agencies to upgrade its credit rating.
Iron ore prices slumped to a decade low of $US38 a tonne in late 2015, but rebounded 80 per cent in 2016 following improved steel demand in China.
The surge has given Fortescue breathing space to align its cost structure with larger rivals BHP Billiton, Rio Tinto and Brazil's Vale, and use the extra cashflow to trim its heavy debt burden.
The company said it held $US1.2 billion in cash at December-end, while net debt stood at $US4.0 billion.
The miner maintained its 2016-17 shipment guidance of 165-170 million tonnes.
RBC Capital Markets analyst Paul Hissey said while volumes were in line with Fortescue's target, the company's cost reductions had clearly beaten expectations of falling to between $US12-$US13 per wet metric tonne.
"Price realisation above the upper end of guidance was also pleasing and no doubt contributed to better cash flow which has facilitated further debt repayments," he said in a note.
At 1202 AEDT, Fortescue shares were up 2.62 per cent at $6.65 each, in a weak Australian market.
AAP