Mount Gibson starts China legal action

Miner Mount Gibson Iron says it has started legal proceedings in Hong Kong to recover money owed from iron ore sales to a Chinese company.

In its quarterly report today, the WA iron ore miner said its full-year earnings was impacted by a $15.2 million provision for doubtful debt on the amount owed by Sinom (Hong Kong) Ltd for sales between April 1 2008 and June 30 2008.

"The amount related to the Hamersley benchmark price increase from 1 April 2008 that was announced on 24 June 2008 after the sales had already occurred," the company said.

"Legal proceedings in Hong Kong and arbitration proceedings in Australia to recover the debt owing to Mount Gibson have commenced."

Mount Gibson's full-year earnings were also impacted by an adjustment to its foreign exchange hedge book, reporting a $14.6 million mark-to-market loss for fiscal 2009.

Overall, the company reported an unaudited net profit after tax of $42.6 million for the 2009 financial year, driven by an improved second half.

This compares to a net profit of $113 million recorded for the 2008 financial year.

The fiscal 2009 net profit was on the back of $431.7 million in revenue.

Over the course of the year, the company mined 5.91 million tonnes of iron ore and sold 5.39 million tonnes.

At the end of the reporting period, the company had $222 million cash on hand and $105 million in senior debt.