June 2018 Quarterly Production Report: Fortescue Metals Group Limited’s (ASX: FMG) stock fell 3.7% on July 26, 2018 despite the company releasing a decent June 2018 quarterly production results, according to which there was record iron ore shipment of 46.5 million tonnes (mt) and cash production costs (C1) of US$12.17 per wet metric tonne (wmt) in the June quarter. As a result, FMG in FY 18 has shipped 170mt with an estimated full year C1 cost of US$12.36/wmt, which is equivalent to US$11.83/wmt after normalising for an original assumed exchange rate of US$0.75 and an oil price of US$53 per barrel (WTI). Moreover, during the June quarter, FMG has formally approved the development of the US$1.275 billion Eliwana project which will underpin the introduction of a 60 per cent iron grade product. The first ore from Eliwana is planned to be delivered in December 2020. The company has cash on hand at 30 June 2018 of US$863 million after the repayment of the balance of the 9.75% Senior Secured Notes (US$160 million) and payment of the interim FY18 dividend (US$264 million) during the June quarter. Now, the net debt is of US$3.1 billion. For FY 19, FMG is targeting total shipments to be between 165-173mt, C1 costs between US$12-13/wmt and total capital expenditure of US$1.2 billion. Meanwhile FMG stock has risen 1.56% in three months as on July 25, 2018 and is trading at a P/E of 7.44x.
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