Join our daily newsletter At The Bell to receive exclusive market insights
- After less than one year in operation, Mount Gibson Iron (MGX) is suspending activities at the Shine iron ore mine in Western Australia
- This follows the decline in iron ore prices, product discounts and increased shipping freight rates
- Mount Gibson says while the decision is disappointing, it’s commercially necessary to limit spending and preserve the mine’s future
- Positively, the company’s Koolan Island operation won’t be impacted by Shine’s suspension
- MGX shares are down 6.25 per cent to trade at 45 cents
Mount Gibson Iron (MGX) will implement a staged suspension of operations at the Shine iron ore mine in the Kimberley region of Western Australia.
The company said this decision is in response to the significant decline in iron ore prices, discounts and penalties for medium and lower-grade iron ore products, and a rapid rise in shipping freight rates from Geraldton Port.
As a result of the mine’s suspension, MGX has withdrawn the sales guidance for the 2021 and 2022 financial years.
Mount Gibson believes that while it’s a disappointing decision to make as the Shine mine is only in its first year of operation, it’s a commercially necessary decision in order to limit spending and preserve the mine’s future.
CEO, Peter Kerr, spoke on the decision to suspend operations.
“Our Shine operating and commercial personnel have worked extremely hard to bring the mine into production this year, so it is very disappointing that we must now suspend operations,” he said.
“However, we are optimistic that market conditions will allow us to restart the Shine operation in the future and we will place the site into a position where a prompt restart can be considered in due course.”
Positively for the company, its Koolan Island operation won’t be impacted by Shine’s suspension.
Mount Gibson will provide further updates when it releases its September quarterly report.
Company shares were down 6.25 per cent to trade at 45 cents at 3:01 pm AEST.
