June 20 (Bloomberg) -- Fortescue Metals Group Ltd., Australia’s third-largest iron-ore producer, cut its full-year production forecast and said it doesn’t expect to sell a stake in its port and rail assets until the September quarter.
Perth-based Fortescue expects to produce between 80 million and 82 million metric tons in the year to June 30, lower than its forecast on Sept. 4 of production of between 82 million and 84 million metric tons, it said today in a statement.
Shares fell 6.55 percent to A$3.14 as of 3:29 p.m. in Sydney trading, the most since April 18. The stock is down 32 percent this year.
The company is focusing on lowering its costs and will also consider “further third party investment in assets outside our core mining operations,” Chief Executive Officer Neville Power said in the statement. The price of iron ore, Australia’s biggest export, has dropped 24 percent from a 16-month high on Feb. 20, meeting the common definition of a bear market.
A process to sell a minority stake in its rail and port operation in Western Australia state is “substantially advanced,” Fortescue said in the statement. More time is needed to study offers for the assets because of the level of interest received, it said.
Fortescue started talks to sell the assets in December and hired Lazard Ltd. and Macquarie Group Ltd. as financial advisers. The sale may be concluded by the end of June, Chief Financial Officer Stephen Pearce said on April 18.
“We are very pleased with the progress to date, having shortlisted potential investors and advanced to the next phase of the commercial process,” Power said in the statement.
Fortescue could net as much as $5 billion from the sale of the infrastructure assets, Credit Suisse Group AG said June 6.
“Based on the current status, if sanctioned, any transaction is likely to be announced in the September 2013 quarter,” the company said. “Fortescue is not under pressure to conclude a sale of an interest in its rail and port assets.”
To contact the reporter on this story: David Stringer in Melbourne at firstname.lastname@example.org
To contact the editor responsible for this story: Jason Rogers at email@example.com