Mount Gibson Iron Ltd has delivered a mixed report card for the December quarter, with ore shipments hitting a record level but profit below forecast and expansion projects adversely affected by cost increases and delays.
Mount Gibson Iron Ltd has delivered a mixed report card for the December quarter, with ore shipments hitting a record level but profit below forecast and expansion projects adversely affected by cost increases and delays.
Mount Gibson Iron Ltd has delivered a mixed report card for the December quarter, with ore shipments hitting a record level but profit below forecast and expansion projects adversely affected by cost increases and delays.
In its quarterly report, the company said its net profit for the six months to December 2006 was expected to be $23 million.
While this was almost the same as its full-year profit in 2005-06, it was also $6 million below the September 2006 forecast, when Mt Gibson was in the midst of its successful takeover battle with fellow iron ore miner, Aztec Resources.
The main reason for the profit shortfall was that the realised price of ore sold was $3.05 per tonne below forecast.
Managing director Luke Tonkin said shipping related issues were principally responsible for the lower realised ore price.
The company said its main operational focus during the quarter was developing a new pit at its Tallering Peak mine, and this reduced mine output to 681,000 tonnes in the quarter. However, with large stockpiles, the company achieved a record by shipping 708,000t from the port.
The company said shortages of skilled labour and rising costs continued to present a significant challenge.
“A shortage of appropriately qualified labour and the increase in labour and consumable costs within the industry continues to dampen the operational potential of Tallering Peak and skilled labour shortages represent a risk to sustained operational performance,” it said.
Mount Gibson also disclosed that the capital cost of its expansion projects had increased substantially.
The estimated cost of Extension Hill had increased to $73 million from a June 2006 estimate of $67 million.
The total development cost of the Koolan Island iron ore mine, previously owned by Aztec, was forecast at $147 million from a September 2006 estimate of $133 million.