Full-year guidance was lifted to 160-165 million tonnes from 155-160Mt after 40.4Mt was shipped in the March quarter.

C1 cash costs were $US25.90 per wet metric tonne, 9% lower than the December quarter and in line with guidance for the current half of $25-26/wmt.

Total delivered costs were $34/wmt, a 17% drop on the December quarter, while the company’s average realised price was $48 per dry metric tonne, based on the average Platts 62% contract price of $55/dmt.

It comes after FMG CEO Nev Power told MiningMonthly.com's sister publication MiningNews.net last month that the company was working to slash a further $5-6/t off its cash costs.

The cost improvements reflect the company’s productivity focus, as well as reductions in the Australian dollar, oil price and freight rates.

The progress on costs has led the company to slash its 2016 financial year C1 cost guidance to just $18/wmt – a figure that rivals Rio Tinto’s December costs of $17/t.

The company’s breakeven price for FY16 is expected to be just $39/dmt, while guidance has been set at 165Mt.

“Fortescue has achieved another strong operational result underpinned by outstanding performance on costs with C1 guidance for FY16 now at $18/wmt,” Power said.

“Our relentless pursuit of sustainable cost reductions has ensured continued positive cash margins with closing cash increasing to $1.8 billion, despite a volatile market impacted heavily by the threat of oversupply.”

The cash balance was up from $1.6 billion at the end of December, as FMG reduced mining activity to drawdown on excess mined inventory, resulting in a $170 million working capital improvement.

The company expects to maintain a cash balance of more than $1.5 billion through the June quarter.