Mount Gibson Iron Ltd moves down on ore reserves and mineral resources’ statement

  • Oct 11, 2018 AEDT
  • Team Kalkine
Mount Gibson Iron Ltd moves down on ore reserves and mineral resources’ statement

This statement ending June 30, 2018 is in context to the ore reserves and the mineral resource of the company Mount Gibson Iron Limited (ASX: MGX). The iron ore with average grade of 61.8% Fe out of total mineral resource is estimated to be around 76.4 million tonnes, while ore reserves moved up to 21.0Mt at 65.5% Fe against last year’s 12.8Mt at 66.0% Fe.

Mr. Peter Kerr, the CEO of Mount Gibson is very hopeful about the Flagship Koolan Island restart project which is on the way to begin the sales of high grade ore sales in the march quarter of 2019. Mr. Peter Kerr is very satisfied that there is an increase in the ore reserves at the Koolan Island by 64% in the month of April having an upper hand both in terms of mine life and significant value to the premium quality of iron ore production opportunity. Once the sale will begin, the ore reserves at Koolan islands producing premium quality iron ore (hematite) will be in the top list of iron ore mines in Australia and this will in turn help to create long term value with their shareholders.

The company has targeted to begin with continuous focus to extract maximum benefits from its iron hill operation in the mid-west till the last. The mining is expected to end by 2018 so that sales might end by quarter one of 2019.

As per the updates regarding the related ore and mineral resources, there is a mining depletion of total 3.8 Mt since 30 June 2017. A re-estimation and reinterpretation of these deposits in the month of December 2017 has resulted in the increased in the Iron hill mineral resource by 0.9 Mt. At Koolan island restart project, the minerals got reduced as a result of removal of residual by approximately 8.6 Mt. There were no changes in the mineral at extension hill, Shine and Tallering Peak. There is a significant increase in the ore reserves at Mount Gibson by 65.5% Fe (21.0 Mt) during its reporting period located at the Koolan islands. The reason for the increase in ore reserves was the outcome of the successful evaluation and completion of the financial and technical possibility to access high grade mineral resource at eastern end of main pit. The company has made a disclosure stating that it has not made any changes in regards to its methods used in sampling, sub sampling, drill and data spacing, estimation, mining and metallurgy, cut-off grade.

If we see the 6 months and 1-year performance report the results are positive with returns of 12.35% and 19.74% respectively. The performance returns of 5 years and 10 years were -37.24% and -26.58%. If we see the entire journey of Mount Gibson, a negative performance of -71.34% is seen. The company has made a net profit of A$ 99.129 million. The company’s asset to liability ratio shows its ability to meet its long-term obligations. Cash flow from the operating activities has been A$99.227 million. Cash used in the investing activities was A$ 79.736 million. The net cash used in investing activities was around A$ 21.983 million. As a result of which the cash and cash equivalent at the end of year with the company was A$ 46.547 million.

The share price of Mount Gibson was A$ 0.450 (down 1%) with market capitalization of A$ 500.3 million and PE ratio to be 5.01x, as at October 11, 2018. If we observe the price movement of the share we see that the moving average convergence and divergence line (MACD) is below the signal line.

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