With just a few weeks as Fortescue Metals Group's new chief executive under his belt, Dino Otranto said the Australian iron ore giant had delivered a "solid" quarter and is about to sell the first ore from Belinga project in Gabon.
In Gabon, where FMG is in a three-year study period, Otranto said engagement with the government was "very positive" as it prepares to ship its first ore just six months after starting work.
Otranto said FMG wasn't concerned by dealing with the new government, which seized power in a coup earlier this year, saying the coup had been a "non-violent" removal of president Ali Bongo whose family had held power for 80 years.
Operationally, he said the pilot production phase had helped FMG to understand the terrain and the logistics challenges, while initial plans for a modest 100,000-200,000tpa operation would generate data as it considered how to develop a full-scale operation, previously guided at 2Mtpa.
"The first product is exceptional in nature, but we've taken a big risk, so that is why we are now fast-tracking exploration."
SRK Consulting completed work on the project in 2014, on behalf of the government, and said historical resource estimates of more than 400Mt at over 60% iron have an indication of the potential size and grade but included only six of 10 known prospects.
In the Western Australian Pilbara, where FMG has produced 2Bt over 20 years, production was steady at 48Mt and sales for the quarter were 45.9Mt, 6% lower than the prior quarter but steady year-on-year.
The company said its average hematite production fetched around US$100/dmt with steady C1 costs of $17.93/wmt.
The Iron Bridge magnetite operations continues work through its commissioning issues with a second shipment imminent, with revenue generated at $131/dmt.
Cost at Iron Bridge are about $45/t, plus $7/t in capex costs.
Otranto said Iron Bridge was on track to deliver 5Mt in FY24 on a 100% basis, and it is still confident of reaching nameplate after 24 months of operations.
It previously downgraded first year production from 7Mt because Iron Bridge is more complex than FMG's other assets, but despite that, Otranto said some parts of the project were ahead of its expected commissioning curve.
Getting the project derisked will allow FMG to evaluate other magnetite deposits in WA, including in the Mid West region.
FMG ended the quarter with cash of $3.1 billion and net debt of $2.2 billion after spending $2 billion on its final dividend, capex and investments of $764 million, and $59 million on global exploration.
Its focus in the Pilbara is on new hematite discoveries, with additional drilling for copper in Argentina and Queensland, and rare earths and lithium in Brazil.
Spending on track
Capex spend was lower, but the company still expects to spend around $2.8-3.2 billion for the full year, plus $400 million for Fortescue Energy before it takes its first five projects to a final investment decision.
Energy boss Mark Hutchinson said the company was still confident of taking five final investment decisions before year's end with the aim of delivering a shortlist of projects to the board within weeks.
Little could be said about the size or location of the projects, with possible options in US, Norway, Kenya, Brazil and Australia being assessed.
FMG also confirmed it bid on the recently announced South Australian hydrogen project.
Otranto said the iron ore business continued to generate good returns that were helping FMG push ahead with its green metals and green energy ambitions.
Full year guidance remains 192-197Mt in shipments with C1 costs between $18-19/t.
FMG shares were steady at A$21.85 (US$13.73) today, capitalising the miner at A$68 billion.