The Fortescue Metals Group Limited (ASX: FMG) share price was trading 4% lower on Thursday after the Australian iron ore heavyweight released its quarterly production report.
Fortescue, which produces and ships its ore from Western Australia, revealed in an ASX filing that it produced some 40.2 million tonnes of iron ore during the quarter ended September 2018.
Costs to produce the ore were US$13.19 per wet tonne (wmt), slightly higher than the previous quarter’s average cost of $US12.17 per tonne.
However, Fortescue CEO Elizabeth Gaines was quick to point out that the average price rose to $US45 per tonne and the company remains on track for a full year production profile of between 165 million and 173 million tonnes.
“The Fortescue team have delivered a strong start to FY19 with shipments of 40.2mt for the quarter, an increase in realised price to US$45/dmt through our optimised product strategy and C1 costs of US$13.19/wmt,” Gaines said.
“Shipments of our 60.1% iron grade product, West Pilbara Fines (WPF) are scheduled to commence from December this year, further enhancing our product mix.”
Fortescue noted that its $US500 million share buyback program will be funded from cash flows from the business and remain in effect for 12 months.
Fortescue ended the quarter with $US972 million of cash and net debt of $US3 billion.
“Fortescue’s disciplined capital management is a key focus, with our A$500 million share buy-back program announced during the quarter,” Gaines added.
According to data from Indexmundi, iron ore prices have fallen 10% so far in 2018 but ended September at $US68.44 per tonne.
The Fortescue share price is down from almost $5 in February to $3.70 today, according to Yahoo!Finance.
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