An independent Australian producer of high-quality direct shipping grade iron ore products, Mount Gibson Iron Limited (ASX: MGX)
on 29 April 2019 released its quarterly results for the period ended 31 March 2019.
During the March quarter period, MGX concluded the final Iron Hill shipments in the Mid-West successfully and started the production work of high-grade ore at Koolan Island mine, Kimberley. Also, in the quarter period, the Mid-West direct shipping ore sales was noted at 0.4 million wet metric tonnes (Mwmt). The quarterly ore sales revenue was of $29 million Free on Board (FOB), and for the 9 months which ended on 31 March 2019, the ore sales revenue was of $168 million FOB.
As a result of improved iron ore demand
, the pricing for all products increased. Further, there were significant supply interruptions in Brazil region, as well as weather related disruptions from the Pilbara zone, Western Australia.
Since the commencement of this financial year till 31 March 2019, the total Mid West sales were 2.6 Mwmt, which was above the guidance for the Mid-West ranging between 2.0-2.3 Mwmt. The preparation of the shipping of low-grade stockpiled material is under process phase and is expected to commence in June 2019. It would continue for around 6 months based on the market conditions.
The Mid-West cash costs for the quarter was well below the guidance and was recorded as $33/wmt FOB. The ore production at Koolan Island started at the end of the quarter. The first shipment of high grade 65% iron was done in April 2019
The company expects that the sales of high-grade ore from Koolan Island, in the June quarter to be in the range of around 0.6-0.7 Mwmt.
During the period, there was a positive cash inflow of $16 million from the Mid-West business. The company noted the interest revenue standing at $3 million. Simultaneously, there was also a corporate cost noted at $3 million. The cash outflow stood at $12 million which included net working capital, before Koolan Island cash spend recorded at $41 million. According to the present prices of the high-grade ores, MGX anticipates that there will be a positive cash flow from May this year.
By the end of the Q3 FY2019 period, the company’s total Cash and liquid investments were worth $394 million from $431 million recorded in Q2 FY2019.
Besides, MGX was admitted to the S&P ASX-300 Index on 18 March this year.
The announcement also highlighted that the company expects, for FY2019- 2019 period, the total sales will be in the range of 2.7-3.3 Mwmt of direct shipping ore iron ore, at an average all-in group cash cost in the range of $52 to $57 per wmt FOB, excluding the seawall construction of Koolan Island, along with the restart expenses.
In the previous six months period, the stock of the company had generated an excellent return of 129.59%. At present, the shares of MGX is trading at A$1.170 (AEST: 3:41 PM, 29 April 2019), up by 4.00% as compared to its previous closing price. Mount Gibson Iron Limited holds a market capitalization of A$1.27 billion and has approximately 1.13 billion outstanding shares.
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