Mount Gibson’s Iron Ore Slump Sparks Strategic Shift to Gold

Financial Results Highlight Market Pressures

Mount Gibson Iron Limited has revealed a challenging financial year ending 30 June 2025, posting a net loss after tax of A$82.2 million. This stark reversal from a modest profit in the prior year reflects a confluence of factors including a 49% drop in revenue to A$350.4 million, significantly lower iron ore prices, and a hefty impairment charge of A$90.4 million against its Koolan Island assets.

The iron ore market volatility, exacerbated by geopolitical tensions and economic uncertainties, saw benchmark prices for 62% iron ore fines fall to an average of US$101 per dry metric tonne, down from US$119 the previous year. Mount Gibson’s own sales volumes declined 36% to 2.6 million wet metric tonnes, impacted by operational transitions at Koolan Island and adverse weather events.

Operational Challenges and Cost Pressures

The Koolan Island mine experienced a complex transition of mining operations from the western to eastern pit, necessitating repositioning of haul ramps and extensive ground support work. These activities, combined with cyclone and wet season disruptions, led to a 38% drop in ore production to 2.3 million tonnes and a tripling of the waste-to-ore stripping ratio to 3.0, 1. Although unit cash operating costs increased to $126 per wet metric tonne FOB, the company expects cost efficiencies as the strip ratio normalises in FY26.

Despite these headwinds, Mount Gibson maintained robust liquidity, with cash and equivalents, term deposits, and financial assets totaling approximately A$464 million at year-end. The company also progressed a share buy-back program, repurchasing nearly 39 million shares, or 3% of issued capital, at an average price of $0.313 per share, signaling confidence in its capital management strategy.

Strategic Pivot, Entry into Gold Mining

In a significant strategic development post year-end, Mount Gibson announced an agreement to acquire Northern Star Resources Limited’s 50% interest in the Central Tanami Project Joint Venture (CTPJV) for A$50 million. This acquisition marks Mount Gibson’s first major step into the gold sector, adding a high-quality asset with over 1.6 million ounces of gold resources and infrastructure including an idle processing plant.

The CTPJV, located in the Northern Territory’s established gold region, offers near-term development potential and aligns with Mount Gibson’s objective to diversify and grow as a multi-commodity metals producer. The transaction is subject to regulatory approvals and other standard conditions, with a targeted completion by March 2026.

Looking Ahead, Focus on Transition and Growth

Mount Gibson’s board outlined key priorities for FY26, including safely completing the Koolan Island transition, driving cost reductions, and advancing the Central Tanami Project towards a potential development decision within 12 to 18 months. The company is targeting iron ore sales of 3.0 to 3.2 million tonnes at improved unit costs and continues to pursue exploration and investment opportunities in base metals and precious metals.

While the company did not declare dividends for FY25, it remains well-positioned financially to fund its growth initiatives. The market will be watching closely how Mount Gibson navigates the iron ore price environment and executes its strategic pivot into gold.