The iron ore company increased its cash flow and was able to reduce its net debt to US$0.5 billion from US$2.1 billion in June.

Australian iron ore company Fortescue Metals Group (ASX:FMG,OTCQX:FSUGY) hasn’t lost any of its heat, with the company announcing high numbers again for the latest quarter.

Fortescue was able to reduce its net debt to US$0.5 billion from US$2.1 billion in June. The company also increased its average revenue, receiving US$85 per dry metric tonne (dmt), as compared to US$45 per dmt in the year-ago period, and grew its cash on hand to US$3.4 billion.

Elizabeth Gaines, Fortescue CEO, commented on that success in the company’s report for the September quarter, expressing confidence about the coming months.

“The combination of operational performance and realised price has generated exceptional operating cashflows and lowered net debt to US$0.5 billion at 30 September 2019,” she said.

“This has provided the capacity to further strengthen the balance sheet through debt reduction and refinancing of the term loan on improved terms.”

According to the report, Fortescue also plans on entering the premium iron ore market, with its US$2.6 billion Iron Bridge magnetite project set to start production in the first half of 2022.

Fortescue’s success follows its record-breaking June quarter, when the company shipped 46.6 million tonnes of iron ore from its West Pilbara project. Fortescue also enjoyed reduced cash production costs year-on-year — they sank from US$13.19 per wet metric tonne (wmt) to US$12.95 per wmt.

Much of Fortescue’s success comes from the hot year iron ore has had. The metal saw a surge in price as annual production plummeted, partially due to the fallout from Vale’s (NYSE:VALE) dam collapse in January, which killed at least 248 people.

According to FocusEconomics, demand for iron ore will likely remain high in the Chinese market, which should buoy prices.

Fortescue’s share price has been on the rise this entire year, increasing by 110.84 percent since January. The company’s shares are currently trading at AU$8.75.

Iron ore is changing hands at US$90.11 per tonne.

Don’t forget to follow us at @INN_Resource for real-time news updates!

Securities Disclosure: I, Sasha Dhesi, hold no direct investment interest in any company mentioned in this article.

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