Junior iron ore miner Mount Gibson Iron (MGX) yesterday owned up to a loss of $870 million for the December half year.
And after that sort of performance, it was no wonder the company said it had and determined it would be “inappropriate” to declare a dividend given the challenges facing the miner.
That was a no-brainer, after the company had previously told the market of impairment charges of $946.3 million relating to its WA iron ore mining operations on Koolan Island.
That produced a loss after tax of $869.8 million from a profit of $78.3 million in the previous corresponding half year period.
Chief executive Jim Beyer said $844 million of the impairment was related to the failure of the main pit seawall at the Koolan Island mine with the remainder linked to the impact of the plunge in iron ore prices.
The book value of the company’s business now stands at around $342 million.
MGX 1Y – Mount Gibson posts huge first half loss
Production was hurt by the problems at Koolan Island with just 3.1 million tonnes of ore sold during the period at an average price of $61 a tonne, down 39% from a price of $100 a tonne a year earlier.
As a result, sales revenue slumped from $509.5 million to $188.9 million.
Mr Beyer said the company’s remaining Extension Hill mine was performing well and remained cashflow positive during the half with free on board cash costs averaging $49 a tonne.
He said Mount Gibson hopes to reduce costs to as little as $45 a tonne in the June half and sell between 5 million tonnes and 5.4 million tonnes for the full year after gaining additional rail capacity for Extension Hill.
The company had cash and term deposits at December 31, 2014 of $354.4 million, or around 32c a share.
Mount Gibson shares fell 4.1% to 22.3 cents.
