Shares soar after debt paid

Pilbara News - - News - Stu­art McKin­non

Shares in Fortes­cue Met­als Group were up after the iron ore miner said it would save $US26 mil­lion a year in in­ter­est pay­ments by re­pay­ing $US700 mil­lion in debt ahead of sched­ule.

The 2019 se­nior se­cured credit fa­cil­ity, or term loan, will be re­paid on Fri­day.

Chief fi­nan­cial of­fi­cer Stephen Pearce said the $US700 mil­lion re­pay­ment added to the $US2.9 bil­lion the com­pany re­paid in full-year 2016 and fur­ther re­duced the com­pany’s all-in cost base. “We will con­tinue to ap­ply our free cash­flow to re­pay debt, low­er­ing our gear­ing and strength­en­ing our bal­ance sheet,” he said.

FMG has been on a cost cut­ting drive in re­cent times and sought to use free cash­flow to pro­gres­sively re­duce its debt ex­po­sure in a lower iron ore price en­vi­ron­ment.

The strat­egy is pay­ing off with the com­pany’s share price on a steady rise this year off a 52-week low of $1.44 in Jan­uary.

FMG has also ben­e­fited from a stronger than ex­pected iron ore price in re­cent months.

Pic­ture: Mo­gens Jo­hansen

Fortes­cue chief fi­nan­cial of­fi­cer Stephen Pearce at the Kings de­posit at the com­pany's Solomon mine.

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