The Mount Gibson Iron Limited (ASX: MGX) share price has is up 0.70% this morning, after the iron ore minor reported improved performance in the quarter ended June 2020. Iron ore sales for the quarter totalled 1.2 million wet metric tonnes, giving group cash flow of $24 million for the quarter.
What does Mount Gibson Iron do?
Mount Gibson Iron is an Australian producer of iron ore products. It operates the Koolan mine located in the Kimberley and the Extension Hill mine site in the mid-west region of Western Australia. Koolan Island is Mount Gibson's flagship operation. A former BHP Group Ltd (ASX: BHP) mine, Koolan Island boasts Australia's highest grade hematite ore reserves.
What did Mount Gibson Iron report?
Mount Gibson delivered its report for the quarter ending 30 June 2020 this morning. The miner made total sales of 1.2 million wet metric tonnes (Mwmt) over the quarter. This included 0.52 Mwmt from Koolan Island and 0.64 Mwmt from Extension Hill.
Group cash flow for the quarter was $24 million with $9 million incurred in constructing an airstrip at Koolan. Over the financial year, group cash flow was $72 million before Koolan airstrip construction costs of $14 million.
Commenting on the update, CEO Peter Kerr said, "Mount Gibson achieved an improved performance in the June quarter despite substantial operating challenges related to COVID-19 restrictions, and the business ended the first full year since Koolan Island's restart in solid shape.
Mount Gibson reported cash and liquid investments of $423 million at 30 June 2020, and no borrowings. This compares to $402 million cash and liquid investments at the end of March 2020 and $385 million at the end of June 2019.
What is the outlook for Mount Gibson Iron?
The iron ore price soared this month due to supply concerns and rising demand from China. Iron ore reached US$110 a tonne in July, a level not since August 2019. This has lifted the Mount Gibson share price, which is up 16% since the end of June. The miner successfully added to its cash and investment reserves over the year, leaving it well positioned as it enters FY21.
In the year ahead, Mount Gibson is focused on increasing mining movements at Koolan Island to substantially complete open pit waste stripping. Ore shipment volumes for Koolan Island are expected to dip slightly in FY21 but then increase significantly from FY22 onwards. Mount Gibson confirmed that production and costs guidance for FY21 will be delivered with the release of annual results.
At the time of writing, the Mount Gibson share price is up 0.70% in early trade to 72 cents per share.
