Fortescue Metals (FMG) reported Sept Q results with 42.5Mt shipped at a C1 cost of US$13.02/wmt (+6% on production, -1% on costs QoQ). Strip ratios decreased to 1.5:1 (from 1.6:1) as overburden removal decreased -15% after an inventory increase in Q1 which saw higher stripping. Gross debt remained at US$4.0bn (unch) and cash was largely unchanged at US$962m. The average received price of US$48/dmt implied a price realisation gap to the Platts 62 CFR of 33% (unch QoQ). Shipments of the first West Pilbara Fines commenced in December and the share buyback has completed ~28% of its total target. The advent of shipping higher-grade West Pilbara ores against the backdrop of perceived supply disruption from Vale will be a net positive for FMG near term but longer-term macro headwinds continue to prevail. HOLD maintained and target price of $4.92ps.
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