Mt Gibson stays cashflow positive
UPDATE 10.35am: Shares in Mt Gibson Iron were firmer on a better than expected quarterly report from the iron ore miner and better sentiment towards the industry as a whole.
The junior miner has seen its shares crunched in recent months because of a plunging iron ore price and a mine wall collapse that flooded its Koolan Island mine with sea water, forcing an immediate halt to operations.
However the company announced this morning it had been able to keep its other operation, Extension Hill, in cashflow positive territory by reducing costs to $47.80 per wet metric tonne over the quarter and $43.80 per wet metric tonne in the month of March itself.
It said operationally, Extension Hill continued to perform strongly in the March quarter, with total ores sales of 776,000 wet metric tonnes in the quarter, comprising 424,000 wet metric tonnes of lump and 352,000 wet metric tonnes of fines.
However the company said it would need to cut costs further at Extension Hill to remain cashflow positive in the absence of a recovery in the iron ore price.
Mt Gibson said it made two shipments from Koolan Island over the quarter totalling 297,000 wet metric tonnes. The ore came from the Acacia East satellite pit, which would now be demobilised.
"A decision on whether to recommence production from the main pit at Koolan will only be made if Mount Gibson believes it is viable to do so in the context of the outlook for iron ore prices," Mt Gibson said.
The company said it expected to make a decision on the future of the mine in the middle of the year.
The miner's cash pile fell from $354.4 million at the end of December to $324 million at the end of March.
Chief executive Jim Beyer said the company continued to focus on capital preservation and cost reduction initiatives in the March quarter as the iron ore price declined further to its lowest point since the Global Financial Crisis.
"This disciplined approach has helped the company retain a strong financial position with substantial cash reserves and negligible debt, and in doing so maintain significant flexibility to adapt to the extremely challenging conditions," he said.
"Extension Hill remained cashflow positive for the quarter, with operating cash costs declining in line with guidance.
"Given continued volatility in conditions, we are closely monitoring the situation and pursuing further efficiency and cost-saving initiatives.
"Accordingly, we continue to align staffing with our changing organisational requirements, most notably the completion of the limited satellite mining campaign at Koolan Island.
"All exploration activity, other than minor work related to approvals for Extension Hill South, has also been suspended."
Mt Gibson shares were up 2.2 cents, or 11.28 per cent, to 21.7 cents at 9am.
