BHP Billiton is on track to record underlying profits of more than $US12 billion ($13 billion) for 2012-13, after a set of strong quarterly results.
Investors responded positively on Wednesday after BHP beat production guidance across most of its product groups, including the iron ore division that ranks as its biggest money-spinner.
The miner surpassed its iron ore guidance by more than 2 per cent for the year to June 30, and said it was already capable of producing beyond its guidance for 2013-14.
BHP said the past three months had shown its Pilbara operations could produce iron ore at a rate that would deliver 217 million tonnes if sustained over a year.
Despite this, the company has set its production target for 2013-14 at 207 million tonnes, giving analysts confidence that next year's guidance could be achieved too. "We think they will beat that," said Deutsche analyst Paul Young, who described the 2013-14 guidance as "very conservative".
BHP, which continues to expand its iron ore division, revealed that the cost of its Jimblebar mine expansion had blown out by $US340 million.
However, the company insisted the extra cost had been counter-balanced by cost reductions in other parts of the business.
There were also strong results in the copper and coking coal divisions, but BHP failed to meet its petroleum guidance for the full year by 1.8 per cent.
Despite the miss, analysts from Deutsche, UBS, Macquarie and Goldman Sachs praised the mining group's overall performance for 2012-13.
UBS and Macquarie expect BHP to announce a $US12 billion profit before exceptional items - such as asset impairments - which would be about 30 per cent lower than last year.
It would also represent BHP's second consecutive year of declining profits since it set a record for Australian corporate profits in 2010-11.
But analysts believe the company is now poised to start increasing earnings again. Both UBS and Macquarie believe BHP will achieve slightly higher profits in 2013-14, and higher again in 2014-15 when underlying profits are tipped by both investment banks to be more than $US14 billion.
There is further cause for optimism for BHP's Australian shareholders - their dividends will benefit from a currency arbitrage, now that the Australian dollar appears set for a stint below parity with the US currency.
BHP will confirm its financial results and dividend arrangements on August 20.
The group's shares closed 76¢, or 2.27 per cent, higher at $34.19 on Wednesday. The stock has now risen 10 per cent over the past seven trading days.