Global miner Rio Tinto raised hopes it will "materially increase" cash returns to shareholders, after topping forecasts with a 21 percent rise in first-half profit on Thursday.
"We have overachieved," CEO Sam Walsh told CNBC on Thursday morning. "It is good news."
The Anglo-Australian giant slashed costs and cut capital spending quicker than expected at the same time as it boosted shipments of iron ore by a fifth, which helped it offset a 29 percent slump in iron ore prices this year. Walsh said Rio Tinto was now the lowest cost producer of its kind in the world.
Strong cash flows allowed Rio to cut net debt to $16.1 billion, putting it within the mid-teens range it wanted to hit before it would consider returning capital to shareholders, raising hopes for a share buyback in February, when it announces full-year results.
"We will materially increase shareholder returns when we review them in February," Walsh told CNBC, adding, "A few of our analysts are doing their homework as we speak."
Rio was confident about the long term growth outlook, but warned that the copper market had moved into surplus as new mine supply had come on and more production was expected over the coming year.
The company said it expects 125 million tons of high-cost iron ore supply to be taken out of the market in 2014 as lower-grade producers from China and producers in smaller iron-ore producing countries cut output.
Underlying earnings rose to $5.116 billion in the six months to June, up from $4.229 billion a year earlier. Analysts had expected underlying earnings of $4.78 billion, according to an average of seven analysts polled by Reuters.
Profit from iron ore, which made up 92 percent of underlying earnings, rose 10 percent to $4.68 billion, while copper earnings rocketed 71 percent to $594 million. Its long-suffering aluminium business reported a 74 percent rise in profit to $373 million.
As expected, Rio said it would pay a half-year dividend of $0.96, in line with its policy of paying half of the previous year's dividend.
While celebrating the success of its iron ore expansion, Rio Tinto last week exited its disastrous investment in coal assets in Mozambique, selling most of the Riversdale business it paid $3.7 billion for in 2011 for just $50 million.
Rio Tinto's Australian shares have fallen 2.8 percent this year, underperforming a slight rise in the S&P/ASX 300 mining index.