The Fortescue Metals Group Limited (ASX: FMG) share price is outperforming its peers and the broader market after posting its quarterly report and upgrading its production guidance.
Shares in the iron ore producer jumped 4% to a three-month high of $12.21 in after lunch trade today.
In contrast, the BHP Group Ltd (ASX: BHP) share price and Rio Tinto Limited (ASX: RIO) share price increased by around 2% each, while the S&P/ASX 200 Index (Index:^AXJO) rallied 2.8% at the time of writing.
Capital returns and big dividends
There's more room for the Fortescue share price to run, in my view. The miner posted record third quarter iron ore shipments of 42.3 million tonnes, which was 10% ahead of this time last year, and lifted its full year guidance.
Management expects to ship between 175 million tonnes and 177 million tonnes of ore this financial year. This compares to its previous estimate of 170 million to 175 million tonnes.
This lifts my expectations that the miner will undertake a capital return of some sort when it releases its profit results in August!
Focus on costs
If these aren't positive enough pieces of news, the miner's operating costs also dipped. The C1 cost (the direct cost) fell 2% in the March quarter to US$13.27 per wet metric tonne (wmt) over the same period last year.
However, the C1 cost was up 6% over the last quarter, which was largely due to the higher strip ratio. This means it had to process more waste to extract the same amount of ore.
But investors won't be too bothered by this as the C1 cost is still reasonably low. I was also worried that Fortescue would incur higher expenses from having to work under tight social restrictions in Western Australia due to the COVID-19 pandemic.
Positive outlook
Fortescue received an average of US$73 per dry metric tonne and it painted an upbeat outlook for its iron ore.
The miner is forecasting C1 cost to average between US$12.75 and US$13.25 per wmt for this financial year.
"Fortescue is a core supplier of iron ore to China and we see strong ongoing demand for our products and anticipate a steady recovery in economic activity in that market," said Fortescue chief executive Elizabeth Gaines.
"While the global economic outlook remains uncertain, our balance sheet has never been stronger and we continue to generate sustained cashflows and jobs, invest in growth and focus on delivering returns to our shareholders."
Foolish takeaway
The miner performed strongly under her leadership. Coincidentally, another miner that I am bullish on is Lynas Corporation Ltd (ASX: LYC) and I also believe that its CEO Amanda Lacaze is doing an excellent job.
While I am not suggesting good leadership is based on gender, I think investors are losing out if we didn't see more female chiefs running our top 200 companies.
