Fortescue Metals Group Ltd has reported a strong operating performance in the March 2020 quarter, building on the record achieved for the first half of the 2020 financial year.
The company’s operating performance was sustained with mining, processing, rail, and shipping combining to deliver record third-quarter iron ore shipments of 42.3 million tonnes. This was 10 per cent higher than the year prior, despite weather disruptions and the introduction of COVID-19 measures.
As a result, guidance for the 2020 financial year shipments has now been upgraded to 175 – 177 million tonnes (from the previous upper end of the range of 170 – 175 million tonnes).
The company also reported that C1 costs were US$ $13.27 per wet metric (wmt) tonne for the quarter, which is 2 per cent lower than Q3 FY19 costs of US$13.51 per wmt. “Robust demand” for Fortescue products delivered average revenue of US$73 per dry metric tonne.
Strong free cashflow generation resulted in cash on hand of US$4.2 billion as of 31 March 2020. However, capital expenditure guidance for FY20 has now been revised to US$2.0 – US$2.2 billion (from US$2.4 billion), reflecting expected timing of cash outflows.
The Eliwana Mine and Rail project achieved key milestones in the quarter including the completion of earthworks on stage one of the railway in preparation for first track laying, the first steel erection for the Ore Processing Facility and completion of the permanent village and aerodrome. The first charter flight is expected in the June quarter, while pre-strip mining is scheduled to commence in Q1 FY21.
Fortescue states that it is continuing to work closely with its contractors and suppliers to mitigate any impact of COVID-19 on the project schedule. Site works are also ramping up with the construction peak still expected around mid-year, in accordance with the schedule of first ore on train in December 2020.
The US$2.6 billion Iron Bridge Magnetite project is reportedly progressing on schedule and budget, with first concentrate production planned in the first half of calendar year 2022.
Key milestones in the quarter included detailed engineering passing the halfway mark, procurement of major long lead process equipment committed and the first blast at the Ore Processing Facility site, enabling bulk earthworks to commence.
Key project deliverables in the June quarter include completion of the mine access road and permanent village earthworks and in the second half of the calendar year will focus on commencement of site construction and major module fabrication.