PriceSensitive

Mount Gibson clocks $130M iron ore sales in Q3FY as volatility remains

ASX News, Materials
ASX:MGX      MCAP $364.5M
18 April 2024 11:29 (AEDT)

A bulk cargo ship being assisted by a tugboat as seen from above. Source: Adobe Stock

Mount Gibson Iron (ASX:MGX) has reported its quarterly results for Q3FY24, clocking $130M worth of ore sales in the first three months of the calendar year.

This was derived from 700,000 wet metric tonnes (wmt) at an average grade of 65.4% Fe, bringing total FY24 YTD sales to 3.2Mwmt – in line with overall FY24 guidance.

Cash opex came in at A$99/wmt before royalties at the company’s Koolan Island play, reflecting lower seasonal shipping volumes.

Cashflow margins of $58/wmt were realised, meaning that average cash opex came in at $67/wmt on a Free On Board (FOB) basis. This too was in line with guidance of $65-70/wmt.

The company also inked $42M cashflow in the March quarter including interest income of $5M which was offset by operational costs.

Cash at quarter-end, however, came in at $430M – excluding around $17M in shares and options held in Fenix Resources.

At the end of December, the company’s half-year net profits post-tax reflected nearly $139M.

It’s been a volatile year for iron ore.

If you take a range of forecasts from different analysts, it’s hard to figure out where, exactly, iron ore will go. Some analysts see it falling to US$90/tn in 2024; others go as high as US$130/tn.

Capital Economics, the London-based firm, believe that we’ll see the price of iron ore fall to US$85/tn in 2025.

Meanwhile, prices on the Singapore Exchange (SGX) – which is only one benchmark indicator for Iron Ore though one of those closest to Australia – has gone back to US$115/tn overnight.

What’s driving the volatility? Supply and demand concerns, as always, but more than that – the spectre of China.

The country is sending out mixed economic data right now. It’s most recent inflation read clocked 0.1% – dangerously close to deflation – despite promising manufacturing data released last month.

In the meantime, Chinese data shows a better than expected GDP read, at the same time the country is openly looking for ways to stimulate its property sector.

There’s also the always lingering question on how reliable, exactly, the Chinese data is. Disparities between private sector industrial surveys and government data aren’t uncommon.

The country also stopped reporting youth unemployment in recent history and the latest two sessions Chinese government policy session was not followed by a press conference this year, a rare chance for western Journalists to talk to Chinese government mouthpieces.

At any rate, should prices remain close to US$115/tn, Mount Gibson should see its guidance forecasts remain accurate.

MGX shares last traded at 45cps.

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