It was a mixed December quarter for iron ore miners Murchison Metals and Mount Gibson Iron, as demand for the commodity lowered one miner's shipments but raised the other.
It was a mixed December quarter for iron ore miners Murchison Metals and Mount Gibson Iron, as demand for the commodity lowered one miner's shipments but raised the other.
In its quarterly report out late yesterday, Mount Gibson reported it had shipped 529,000 wet metric tonnes of lump and fines, down from the previous quarter's 656,000t.
During the quarter, the company announced that some of its customers had defaulted on binding offtake deals, which brought to light the state of the global iron ore market to investors.
Mount Gibson said agreements with three of the customers have been terminated and a dispute with a further customer has been referred to arbitration.
Meantime agreements have been reached with the company's remaining original customer base for the remaining contract year. Also the company signed offtake deals with APAC Resources and Shougang Concord during the period.
At the end of the quarter, the company reported an unaudited net profit of $13.3 million and had $137 million cash on hand, including some of the proceeds from capital injections by APAC and Shougang.
"After a very strong result for the September 2008 quarter, the December quarter was negatively impacted by significantly reduced sales volumes, reduced sale prices and a $54.8 million mark-to-market adjustment relating to forecast excess foreign exchange hedging," Mount Gibson said.
Meantime, Murchison fared better than its rival during the period, reporting its second highest quarter of shipments since the start of operations at its Jack Hills mine in the Mid West region.
The company shipped 405,084 tonnes of lump ore, up from the previous quarter's 176,194t.
Murchison did not ship any fines during the quarter.
Managing director Trevor Matthews told WA Business News that customers had not requested fines during the period however in the current environment, fines shipments are expected to pick up.
The company produces around two-thirds lump ore and the rest in fines. Over the quarter mined 331,443t of ore, down from 495,507t recorded in the September quarter.
At the end of the period, the company had cash and liquid investments of $162 million and was debt free.
Shares in Mount Gibson closed down 1.5 cents to 38.5c while shares in Murchison dropped 4.5c to close at 51.5c.
