Lending Association

Mount Gibson Iron rides the wave of the iron ore price surge

The iron ore price surge of late 2023 was the gift that continues giving to Australian miners, as we saw with BHP’s (ASX:BHP) huge $US9 billion plus have year profit and what Rio Tinto (ASX:RIO) will report shorty for its full year but it has also blessed the profit and loss account of tiddler, Mount Gibson Iron.

Mount Gibson’s half year report filed with the ASX on Wednesday should that it got its timing right and rode the December half price rise (and demand) very nicely, thank you.

Iron ore sales were a record 2.5 million wet metric tonnes (wmt) grading 65.4% for record revenue of $432 million (free on board, fob).

Sales more than doubled from the 1.1 million in the six months to December, 2022 but revenue almost trebled from the $152 million on an fob basis. (That means the company’s customers pay the shipping costs, unlike majors such as BHP, Rio and Fortescue which ship and report on a cfr basis (cartage and freight)

That saw gross earnings of $145.7 million for the latest sales, up from just $16 million for the year ago period.

Mount Gibson said net profit for the half of $138.7 million was nearly 20 times the $7.4 million for the same period of 2022 and reflected “continued strong operational improvement and record sales from Koolan Island in the reporting period.”

But the results were made to look better by the inclusion of “a pre-tax gain of $35.9 million on the sale of the Company’s Mid-West assets, which was completed in July 2023,” Mount Gibson said on Wednesday.

Even so net earnings in the latest December half year were still a multiple of the previous’s half’s figure.

Looking to the June 30 year, Mount Gibson said it was keeping sales guidance in the range of 3.8 to 4.2 million tonnes.

And even though the money flooded in over the first half of 2023-24, directors have not declared a division but say they will take another look after the financial year is ruled off and the company’s level of franking credits is known in August.

CEO Peter Kerr, said in Wednesday’s statement that the first half results “reflect a solid operating performance at the high grade Koolan Island mine, resulting in record
six-monthly shipments and enabling Mount Gibson to rapidly rebuild its cash and investment reserves.”

“The Company and its shareholders have benefitted from the substantial overburden stripping and processing facility investments made at Koolan Island over the last few years, such that the operation is performing well at a time of attractive iron ore prices, with the Company positioned for further cashflow generation.

“Koolan Island is Australia’s highest grade direct shipping hematite iron ore mine which provides a strong technical and economic base from which Mount Gibson can pursue future resources investment opportunities.”

Mount Gibson said it had cash on hand at the end of December of $358.5 million, up from $196.1 million at the end of the year ago period.