Rio Tinto's shares have soared toward six-month highs as investors welcomed the miner's $7.8 billion return to shareholders.
The market also cheered Rio's $US6.5 billion full year net profit, capping off a major turnaround by chief executive Sam Walsh since taking over two years ago.
The share price jumped $3.89, or 6.5 per cent, to $63.79 on Friday, but some analysts question if it can go much higher given the current negative environment for miners.
When Mr Walsh presented Rio's 2013 results almost two years ago he had been in the job less than a month.
That day he announced Rio's first ever loss of almost $US3 billion, dragged down by $US14 billion in write-downs.
Since then, he and chief financial officer Chris Lynch have slashed costs and debt out of Rio and on Thursday kept a promise to increase shareholder returns.
Rio has launched a $US2 billion share buyback and also increased its dividend by nearly 10 per cent.
RBC Capital Markets analyst Chris Drew told AAP the pair had done a particularly good job setting Rio up for the new environment of weak iron ore prices, which have halved in 12 months to about $US60 a tonne.
"They are well positioned to weather a tougher market," he said.
"Their cost position is fairly impressive at $US17 a tonne, they have essentially repaired the balance sheet and got gearing down to the bottom end of their range."
Rio's underlying net profit fell only $US912 million to $US9.3 billion, despite commodity price falls reducing earnings by $US4.15 billion.
However RBC has slightly reduced its outlook for the stock price, amid concerns about Chinese demand and a view that Rio can't cut many more costs.
Mr Walsh was bullish about Rio's ability to push on while higher cost iron ore producers go broke, but also gave a cautious outlook saying 2015 would be a tough year for miners.
There is a fair chance the iron ore price will fall further.
Global supply is forecast to increase by 100 million tonnes this year but demand to only rise by 20 million tonnes.
Major job cuts in the Pilbara are considered likely at both Rio and other iron ore miners.
"The decisions we make are in the best interests of our shareholders," Mr Walsh said.
"Yes I am sad for employees and communities and so on but people need to realise the mining industry is cyclical."
Iron ore represents about 80 per cent of Rio's profits.
There were rises in aluminium and copper earnings and a $US1 billion-plus reversal of past aluminium asset write-downs, which augurs well for Rio's ability to at least slightly lift its proportion of cashflow from non-iron ore sources.
"This is a new norm for the industry ... but sooner or later we will see growth in India and other markets in Asia, Middle East, South America and Africa," Mr Walsh said.
"As the world continues to develop they're going to need all of the commodities we supply, including iron ore."
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