Mount Gibson Iron Limited (ASX: MGX), an iron ore product producer, announced on 24th April 2019 that the company recommenced sales from its Koolan Island operation, which is approx. 140km north of Derby in the Kimberley region of Western Australia. The sales marked a contract to sell high-grade iron ore to customers in China, and as per the company, the loading of the cargo, which would carry approx. 72,000 wet metric tonnes (wmt) of iron ore is near completion.
Mount Gibson mentioned that the 72,000 wet metric tonnes of hematite iron ore grades around 65% Fe and is currently loading on a bulk carrier MV S’Hail Al Mafyar to deliver in China on a Free on Board (FOB) basis. The FOB will transfer the liability of the shipment to the buyer upon completion of shipment loading.
As per the company, the recommencing of sales from Koolan Island marks a key milestone for the flagship Koolan Island mine of the company. Mount Gibson also mentioned that the high grade of hematite iron ore present in the Ore Reserves in the Koolan Main Pit makes it the highest-grade exporter in Australia.
As per the company, the Ore Reserves in the Koolan Main Pit accounts for 21 million tonnes, which on an average grade at 65.5% Fe, and is scheduled to be mined over the next 5.5 years.
As mentioned above, the company sees the sale of the iron ore from the Koolan Island as a milestone, because the sale of the iron ore from the prospect marks the first sale from Koolan after a two-year hiatus for redevelopment and refurbishment work.
During the hiatus, the company undertook different development activities such as pit dewatering, pre-production waste mining, etc., and recruited and mobilised more than 300 employees and contractors. As per the company, the recruitment by the company demonstrates its focus on local participation as 20% of the recruited people represents the Dambimangari People, who are the traditional owners of the Koolan Island.
As per the Chief Executive Officer of the company, Peter Kerr, the completion of the development activity in the Koolan Island mine along with the recommencing of the high grade mine is satisfactory, as it signifies the efforts of the company’s team and Mr Kerr also represented its gratitude towards the Dambimangari community and appreciated the support of the community for achieving the milestone.
Mr Kerr also highlighted about the importance of the high grade in Koolan mine and mentioned that the high grade supplied by the company through the prospect in China, will suit China’s focus on steel manufacturing productivity and environmental impact.
The grade of 65.5% Fe would address dual issues currently related to the iron ore market. First, the company is supplying the iron ore to China in the environment of a supply crunch in the global market, which will allow the rapid production of steel in China. Second, the Chinese stance to curb the environmental pollution has seen a suspension on many mills’ activities, the high grade of iron ore will allow the mills in China to operate under the pollution guidance and take advantage of high steel prices in the domestic market.
The share price of the company closed at A$1.160 (as on 24th April 2019), up by 4.505% as compared to its previous close.
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