Fortescue unveils 2014 tonnage, cost estimates

Fortescue Metals Group (ASX: FMG) updated investors today on its production, finances, and FY 2014 outlook, providing a sneak peek into the company’s current and future opportunities.

On the production line, Fortescue has been focusing on tightening its supply chain and cutting costs. Despite “unseasonal wet weather,” the company expects to ship just over 80 million wet metric tonnes (wmt) this year.

On the top line, strong iron ore demand should put revenue within Fortestcue’s US$110 to US$130 per dry metric tonne price range. On the bottom line, previously predicted full year C1 costs are expected to clock in at the lower end of US$45 to US$50 per wmt guidance. Overall, Fortescue estimates a $1.7 billion to $2.0 billion cash balance and $10 billion of net debt by 30 June. The release notes that the company’s debt structure allows it to pay back debt in advance, which it may consider if cash keeps flowing in.

Looking ahead, Fortescue is optimistic about its future. “Fortescue will enter the first of half of FY2014 poised to complete the fastest major expansion in the iron ore industry,” said CEO Nev Power in a statement. “We will triple our production capacity to 155mtpa, and consolidate our position as one of the world’s most important iron ore producers critical in the Asian supply chain.”

The company expects to ship between 127 and 133 million wmt in FY 2013 at a C1 cost of US$38 to $US40. That translates to an approximately 60% tonnage increase at almost 20% less cost to the company.

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Motley Fool contributor Justin Loiseau has no position in any stocks mentioned in this article. You can follow him on Twitter @TMFJLo.

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