Mt Gibson Iron is considering its future, and a potential move into commodities other than iron ore, after suffering a massive half year loss.
The West Australian junior iron ore miner plunged to an $870 million loss, mostly due to a pit wall collapse that forced it to shut its Koolan Island mine, rather then falling iron ore prices.
The result included $946 million in impairments previously flagged to the market. Mt Gibson’s market value is just above $260 million.
“Clearly today’s result is not our best,” chief executive Jim Beyer said.
The board and management are focussed on “getting its backyard in order”, including securing an insurance payout for the Koolan mine incident, and deciding whether to rebuild the wall, which would take at least a year.
Mt gibson also has to decide where its future lay as a mining company, in an environment in which smaller WA iron ore miners are being stretched. “We are a mining company and the board wants us to continue to be a mining company and be making money through that process,” Mr Beyer said.
“What commodities and what form is something that has probably opened up more than it was in the past.”
A decision on Koolan Island is due before the end of June, with care and maintenance costs adding up.
One option is to wait for iron ore prices to improve if repair costs prove prohibitive, but only if financially viable.
The company is still forecasting full year sales of between 5 million and 5.4 million tonnes, with mining continuing at Extension Hill in WA’s mid-west.
The company said it was profitable, with its cash cost guidance range of $US45 to $US47 a tonne, before royalties and shipping costs, below its realised price of $US61 per barrel in the half.
However Mt Gibson was having to shrink itself into a “one-mine” company, Mr Beyer said.
That has included cutting 200 jobs at Koolan Island and 20 head office jobs since December, or 40 per cent of staff.
The company had $354 million in cash at the end of December.
MINE COLLAPSE AND WEAK PRICES HURT MT GIBSON
- Net loss of $869.8m, down from $78.3m net profit
- Revenue of $189m, down 63 pct from $509.5m
- No interim dividend, unchanged