Mount Gibson cash pile swells to A$400m

JOHANNESBURG (miningweekly.com) – Iron-ore miner Mount Gibson Iron’s cash balance of A$400-million at the end of June has placed the company in a strong position to progress its Extension Hill project and to mull over redevelopment alternatives at Koolan Island, while continuing its pursuit of other resources investments.

The cash balance, which grew from A$345-million at the end of March, includes A$49.6-million from a A$86-million insurance settlement relating to the Main Pit seawall failure at Koolan Island in 2014.

The settlement relates to property damage and Mount Gibson is in separate discussions relating to the business interruption component of its claim.

Excluding the Koolan Island insurance claim settlement receipts, the company generated cash flow of about A$6-million in the June quarter.

Mount Gibson sold 843 000 wet metric tonnes (wmt) in the period under review, reflecting continued steady operational performance at its only operating mine – Extension Hill, in the Mount Gibson range south-east of Geraldton.

The mine remained cash flow positive and Extension Hill shipments from Geraldton port totalled 718 000 wmt in the three-month period.

At the end of June, about 239 000 wmt of crushed finished product was stockpiled at the mine, while uncrushed stockpiled product totalled 187 000 wmt.

Quarterly sales volumes included the opportunistic sale of 125 000 wmt of remnant low-grade lump material from the closed Tallering Peak mine site, which assisted with environmental rehabilitation.

Ore sales for the 2015/16 financial year, which ended on June 30, totalled five-million wet metric tonnes, which was at the upper-end of guidance.

All-in site cash costs averaged A$44/wmt sold free on board for the quarter, which was also in line with its guidance.

Mount Gibson CEO Jim Beyer said on Friday that more buoyant conditions in recent weeks and the company’s strong performance in the June quarter provided Mount Gibson with an “excellent” finish to the financial year.

“Consequently, we achieved sales at the upper-end of guidance and costs at the lower end, which combined with comparatively stronger prices, helped us deliver modest, but healthy operating cash flow and gives us cause for substantial optimism for the remainder of the year.

“The successful A$86-million settlement of the property damage component of our insurance claim for the Main Pit seawall at Koolan Island in June was also extremely pleasing,” he added.