Mt Gibson remains at steady output, lowers costs

PERTH (miningweekly.com) – Iron-ore miner Mount Gibson Iron has reported another quarter of steady sales, despite the tough economic conditions faced by iron-ore miners.

Total ore sales for the three months to March 31 reached 1.54-million tonnes, compared with the 1.52-million tonnes sold in the previous quarter.

Mount Gibson reported on Monday that the solid quarterly sales reflected continued steady operational performance from the Extension Hill mine, in the Mid West region of Western Australia, and the completion of mining and sales from the Acacia East satellite pit, at Koolan Island, off the Western Australia coast.

The Extension Hill mine shipped 896 000 t during the March quarter, while the Koolan Island operation shipped a further 651 000 t.

Meanwhile, costs continued to decline, with Mount Gibson reporting an all-in cash cost of A$40/t free-on-board for the quarter, down from the A$47/t reported in the previous quarter.

“In the face of ongoing price volatility in the March quarter, including a drop in the benchmark iron index price below $40/t in January, continued strong operational performances at Koolan Island and Extension Hill enabled the company to maintain its strong cash reserves, further reduce cash costs and generate positive cash flow while also winding down operations at Koolan Island,” said Mount Gibson CEO Jim Beyer.

He noted that the more buoyant prices of recent weeks had been welcome, and provided the company with cause for optimism as its operating focus turned squarely to the Mid West business, where Mount Gibson was targeting the development of the Iron Hill deposit, when the current Extension Hill pit was completed.

“We are also very encouraged by the progress made evaluating the rebuild options for the Main Pit seawall at Koolan Island, while also continuing to evaluate potential new resource acquisition opportunities outside of iron-ore.”

Beyer noted that despite the solid quarterly results, the ongoing volatility in the market meant that Mount Gibson would continue to monitor conditions closely in order to protect its business and preserve value for shareholders.

The company had previously said that it would continue to monitor the viability of the Extension Hill mine with regard to both mine cash flow, as well as historical fixed infrastructure and transport obligations that would become payable on early closure, given the volatility in the iron-ore market.