Mt Gibson posts $870m loss

Mount Gibson Iron will look to its Extension Hill project for an answer to its $870 million first-half loss, which was the result of price falls and interruptions to work at its Koolan Island iron ore mine in the Pilbara.

The failure of a main pit seawall affected operations at Koolan in December, and was a major contributor to a total of $946 million in impairments.

Mt Gibson had to cut its workforce by 200 as a result of the Koolan incident, but retained 125 to carry out a limited mining campaign after it identified about 400,000 tonnes of accessible material on the northern side of the island.

The company reduced its corporate staff by 30 per cent in December.

Mt Gibson said the company would make a decision on whether or not to proceed with rebuilding the seawell at Koolan Island in the June half, saying it would only carry out the work if it was clearly viable and the best use of capital.

The company raised its sales guidance to five million to 5.4 million tonnes for the full year after selling 3.1mt in the first half, compared with 5.1mt in the same period the previous year.

Mt Gibson said its Extension Hill operation in the Mt Gibson ranges near Geraldton was now the company’s primary operating asset, and would be the most significant driver of its financial performance going forward.

“Extension Hill remained cashflow positive during the December half, reflecting ongoing cost reduction and efficiency improvements and the significant contribution from lump ore sales,” the company said.

“(The mine) generated pre-tax operating cash flow of $15 million in the half with an average cash cost of $49 per wet metric tonne, before royalties.”

The company held cash reserves of $354 million.

No dividend was declared.

Mt Gibson shares were 2.1 per cent lower at 23.5 cents per share at 10:45am.