Mount Gibson Iron will receive a $64.3 million business interruption insurance settlement following the failure of the Koolan Island main pit seawall in October 2014.
The company temporarily suspended mining activity at the Koolan Island hematite mine’s main pit due to pit wall instability in 2014. The wall later collapsed in November after flooding caused by high tides.
Around 200 workers were made redundant following the failure, with operation later placed in care and maintenance.
Mount Gibson also decided to sue the engineers responsible for building the Koolan Island mine seawall.
The company has now reached a final agreement with 14 insurers, representing 92.5 per cent of the company’s underwriting cover for business interruption.
The proceeds from the $64.3 million settlement are expected to be received by the end of July 2017, which the company said will strengthen its cash position as it progresses activities to restart production at the main pit.
Mount Gibson CEO Jim Beyer welcomed the settlement.
“We thank our insurance brokers and advisors for their assistance in our claim preparation and negotiation, and we appreciate the diligent and systematic engagement of our insurers to achieve a timely resolution,” he said.
“This settlement, which takes combined insurance proceeds for property damage and business interruption at Koolan Island to just over $150 million, is well timed with construction of the starter embankment for the new Main Pit seawall and related activities progressing in line with the project restart schedule.”
Separate negotiations will continue with one other insurer representing the remaining 7.5 per cent of the company’s business interruption coverage.