Mount Gibson Iron has capitalised on a strengthening iron ore price and high-grade product from its flagship Koolan Island mine in Western Australia throughout the 2019 financial year.
The company restarted the high-grade iron ore operation in the Kimberley region during the June quarter, with production from the site coinciding with its Mid West operations.
While total iron ore sales were down from 3.6 million wet metric tonnes in the 2018 financial year to 3.2 million in 2019, the realised price of ore grew significantly from $54 a metric tonne in the 2018 financial year, to $76 per metric tonne in the most recent period.
This comes off the back of a boost in iron ore prices in 2019 and an increased focus on Koolan Island, according to Mount Gibson chief executive officer Peter Kerr.
“Our strong results came as we transitioned from mining operations in the Mid West to our flagship high grade Koolan Island mine in the Kimberley region, aided by improved iron ore prices and reflecting a firm focus on safety, operational and financial discipline,” Kerr said.
The result has been a significant rise in gross profit from the company’s Extension Hill and Koolan Island operations, increasing from $48.7 million in the 2018 financial year to $85.2 million in the 2019 period.
Mount Gibson’s Extension Hill mine continued to contribute through stockpiled low-grade ore. The company plans to continue operations at Extension Hill in order to capitalise on market conditions.
“We also capitalised on improved conditions by commencing a program of opportunistic sales of stockpiled low-grade material from the Extension Hill mine site which has again extended the life and financial returns of our Mid West business,” Kerr said.
Looking ahead, the company reported that the Extension Hill mine site would complete its program of low-grade sales, with an option to extend the program should favourable market prices continue.
Mount Gibson’s operations therefore contributed to a strong bottom line, according to Kerr.
“Mount Gibson has delivered a robust financial result during a year of significant operational transition, with net profit after tax rising to $133.4 million, comprising a solid profit before tax from all sites of $70.5 million,” Kerr said.
This had laid the foundations for the company aiming for total sales of between 3.7 to 4 million wet metric tonnes of iron at an average group cash cost of $70 to $75 per tonne in the 2019/2020 financial year.