Iron ore miner Fortescue Metals Group is cashing in on the strong run in prices in recent months with a further $US1 billion ($A1.4 billion) repayment of its debt next week.
The world's fourth biggest iron ore exporter said it will make an early repayment of its 2019 term loan on December 23, which will result in an annual interest savings of $US38 million and bring down its gross gearing level to below its 40 per cent target.
"This payment is a continuation of our focused debt repayment strategy and further lowers our total cost position. Fortescue's nearest debt maturity is in June 2019 and is now less than $US2.0 billion," chief executive Nev Power said in a statement.
The reduction in the debt level to within its target range could open the door for higher shareholder payouts. In August, Fortescue had exceeded analyst expectations by announcing a final dividend of 12 cents per share after profit more than trebled.
Fortescue has exploited a rebound in iron ore prices this year to quickly unravel its massive debt pile, which stood as high as $US13 billion in 2013.
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The miner repayed $US2.9 billion of debt during the 2015/16 financial year, bringing its down to $US6.77 billion at the end of June.
It paid down another $US700 million in September.
Iron ore prices, which slumped to a decade low of $US38 a tonne in late 2015, rebounded to more than $US50 a tonne by March on the back of a government stimulus in China, and currently trade at $US80.90 a tonne.
The company has also slashed costs by more than 40 per cent, with cash production costs at $US13.55 per wet metric tonne at the end of the September quarter.
The gains have been reflected in its share price, with Fortescue shares more than trebling over the last 12 months. The stock closed at $6.29 on Thursday.
