Fortescue, which has been racing to cut costs and slash debt to help weather the collapse in iron ore prices over the past two years, said it did not consider issuing new shares to Vale despite $6.1 billion net debt. The company, controlled by founder and chairman Andrew "Twiggy" Forrest, has long been reluctant to water down Forrest's one-third stake and done everything it could to raise funds without issuing new equity. Fortescue's shares rose nearly 7 percent after the announcement to a 16-month high, adding to a stunning 24 percent gain on Monday when iron ore prices soared on expectations of a short-term jump in steel output in China. Follow CNBC International on Twitter and Facebook.