22/09/2021 - 09:28

GWR suspends mining operations

22/09/2021 - 09:28

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GWR Group has become the fourth junior iron ore company to suspend operations or review its strategy in light of the dramatic fall in the commodity’s price.

GWR has been shipping through the port of Geraldton.

GWR Group has become the fourth junior iron ore company to suspend operations or review its strategy in light of the dramatic fall in the commodity’s price.

The Perth-based company said today it would suspend mining for a month at its C4 iron ore mine in the Mid West.

The company has left open its options for the future, saying it holds a significant inventory of mined iron ore stockpiles and may resume mining or pivot its focus as required.

The fact it is leaving crushed and stockpiled ore at its mine site reflects the fact its biggest costs are the trucking and shipping of the ore to customers in Asia.

GWR said a final shipment of iron ore fines was due to leave the port of Geraldton later this month.

Upon completion, GWR will have shipped 660,000 tonnes of ore.

Chairman Gary Lyons said GWR was engaged in discussions with other iron ore producers that have expressed interest in buying some of the high-grade ore it has already mined, in order to blend it with their own product.

GWR’s share price fell 11 per cent today to 12.5 cents after coming out of a trading halt.

That continues its slide from peak levels above 40 cents in July.

Today’s news comes after Venture Minerals announced on Friday the suspension of operations at its Riley iron ore mine in Tasmania, after just one shipment.

Perth-based Venture said it was squeezed in three ways – the sharp fall in the benchmark iron ore price, the increased discount for its low grade (57 per cent Fe) ore and sharply increased shipping costs.

The benchmark price of iron ore (grading 62 per cent Fe) is currently around $US112.94 per tonne.

It has been relatively stable this week but is about half the peak levels around $US230/t recorded just two months ago.

GWR and Venture are among a handful of junior iron ore companies that have entered production in the past year.

The most successful has been Fenix Resources, which recently reported a maiden net profit of $49 million and dividend payments totalling $24.8 million.

Fenix has hedged most of its annual production, of about 1.25 million tonnes, to lock in high prices.

Tony Sage-led Fe Ltd has also hedged its initial iron ore sales.

The company said last week that its offtake partner Glencore has booked a vessel for the maiden shipment of ore from its JWD project.

Fe has hedged the cargo at a floor price of $US160 per tonne.

Mr Sage said it was comforting to know the company had locked in strong prices for this cargo and its next two shipments.

Fe shares are currently suspended while the company assesses a possible acquisition.

Other Perth companies looking to jump aboard the iron ore boom include Strike Resources and CZR Resources.

Strike announced last week it had modified its plans at the Paulsens East iron ore project in the Pilbara.

The company is planning to cut costs by focusing its initial mining on 400,000 tonnes of surface ore and low strip ratio material.

This will be exported through Port Hedland’s Utah Point berth.

Strike’s longer-term plan is to export up to 2Mt pa through the port of Ashburton near Onslow, which would cut trucking distances by 365 kilometres.

Four CZR directors, including chairman David Flanagan, resigned from the company’s board early this month.

The company said the board had been unable to reach a consensus on the development pathway and commercial opportunities for its Robe Mesa iron ore project.

CZR, which is controlled by prospector Mark Creasy, has subsequently recruited two new directors.

The company said it was evaluating all of its project opportunities, including Robe Mesa, other iron ore prospects in the West Pilbara and its Croydon gold prospect in the central Pilbara.

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