Fortescue iron ore shipments surge

Fortescue Metals has reaffirmed its full-year production guidance of 127 million tonnes after increasing its total shipments of iron ore in the third quarter by 56 per cent year-on-year.

At the 4.15pm (AEST) official market close, Fortescue shares lifted 1.13 per cent to at $5.39.

In the three months to March, Fortescue shipped a total of 31.5 million tonnes of iron ore compared to 20.2 million tonnes produced in the previous corresponding period.

Total shipments included 30.8 million tonnes from Fortescue's 100 per cent-owned operations and 0.7 million third party tonnes.

Despite the strong rise, UBS analyst Glyn Lawcock had expected total shipments come in at 32.6 million tonnes and warned that even that figure may not be enough to put Australia's third-largest producer of iron ore on track to meet its full-year guidance of 127 million tonnes.

The miner said it expects to ship 41.6 million tonnes in the June quarter to achieve its full-year guidance.

Fortescue had warned in its December production report that adverse weather in January would impact its full-year shipments.

In the quarter, Fortescue said it mined 29.6 million tonnes of ore, a 17 per cent increase year-on-year, however the miner noted the the impact of seasonal wet weather on production.

Fortescue said the completion of the Kings Valley project during the March quarter lifted the company's production capacity to 155 million tonnes per annum.

The miner reported C1 costs of $US34.88 per wet metric tonne, in line with full-year guidance of $US34 per wet metric tonne that reflects low cost Solomon tonnes and operational efficiencies.

Fortescue retained this full-year C1 cost guidance based on a US-Australian dollar exchange rate of 90c.

The miner said its net debt position at the end of March was $US7.7 billion, including finance leases of $US300 million and cash on hand of $US1.9 billion.

This reflected the "continued strength of operational cash flows, disciplined capital management and lower finance costs following debt repayments," the miner said.