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Mar.29.2024 1USD=7.095RMB
  SteelHome >>Raw Material>>Market Info>>International Dynamics
 
Mount Gibson Announces 2020 Q1 Iron Ore Production Report

https://en.steelhome.com [SteelHome] 2020-04-22 16:28:19

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Key Points (all currency in Australian dollars unless stated otherwise)

1.      Iron ore sales of 1.0 million wet metric tonnes (Mwmt) in the quarter, comprising 0.44 Mwmt of high-grade direct shipping ore (DSO) from Koolan Island and 0.59 Mwmt of low-grade material from Extension Hill in the Mid-West. Iron ore sales for the nine-month year-to-date period total 3.8 Mwmt.

2.      Quarterly sales revenue* of $82 million Free on Board (FOB).

3.      Group cashflow of $19 million for the quarter before investments in Koolan Island capitalised waste stripping ($16 million), airstrip construction ($5 million) and positive working capital movements, for an overall increase in cash and investment reserves by $4 million. Cashflow and sales performance at Koolan Island reflected the impacts of adverse cyclone-related weather on mining, and operating restrictions arising from the Company’s COVID-19 management plans.

4.      The Mid-West low grade sales program continued as planned. Additional sales arrangements were finalised during the quarter to extend the program to at least the middle of this year, and further sales are being investigated.

5.      Cash and liquid investments of $402 million at 31 March 2020, and no borrowings.

6.      Group unit cash costs* of $80/wmt FOB for the quarter before Koolan airstrip construction costs, and $71/wmt FOB for the year to date. Koolan site cash costs were $127/wmt FOB for the quarter including capitalised waste stripping investment. Mid-West cash costs were on plan at $41/wmt FOB.

7.      In response to the COVID-19 virus pandemic, significant changes have been implemented to site operating protocols, travel arrangements and workforce rosters to ensure operational continuity.

8.      Group sales and cost guidance for FY2019/20 was withdrawn given the difficulty of reliably predicting performance in the prevailing uncertain regulatory and global conditions. However, production and sales for the June quarter are expected to improve on the March quarter.

PERFORMANCE AT A GLANCE

 

Unit

Mar-19

Jun-19

Sep-19

Dec-19

Mar-20

2019/20

Quarter

Quarter

Quarter

Quarter

Quarter

YTD

Standard DSO product sales

kwmt

402

370

664

733

439

1,836

Low Grade sales

kwmt

-

237

711

649

587

1,948

Total Ore Sales

kwmt

402

607

1,375

1,382

1,026

3,784

Platts 62% Fe CFR price, average

US$/dmt

83

100

102

89

89

93

Platts 65% Fe CFR price, average

US$/dmt

95

115

110

98

104

104

Realised Koolan fines FOB price*

US$/dmt

-

106

95

73

86

84

Realised Mid-West fines FOB price#

US$/dmt

44

29

29

26

27

27

Realised Mid-West lump FOB price#

US$/dmt

58

36

35

35

37

36

Minor discrepancies may occur due to rounding.

* Realised Koolan FOB prices reflect a mix of month of shipping (M), M+1 and M+2 averages, referencing the Platts 65% Fe Index.  Realised prices are shown after shipping freight, provisional pricing adjustments, and specification adjustments/penalties. # Realised Mid-West FOB prices are shown after shipping freight and specification adjustments/penalties. Mid-West sales since the June 2019 quarter have comprised only shipments of low grade cargoes.

kwmt = thousand wet metric tonnes. US$/dmt = USD per dry metric tonne.

For the purpose of wet to dry tonnage conversion, moisture content typically averages circa 3% for Koolan Island fines and circa 4% for Mid-West products.

COVID-19 BUSINESS RESPONSE

Since early March 2020, the rapid global spread of Coronavirus (COVID-19) has necessitated significant and evolving responses by industry and government to slow the transmission rate of the virus. This has involved severe restrictions on the movement of people into and within Australia, and the implementation of strict social distancing requirements.

In collaboration with relevant authorities, the Australian resources sector has developed a range of stringent protocols allowing controlled movement of mining sector workers, notably fly-in/fly-out personnel, in order that essential activities and production can be maintained whilst limiting the potential spread of COVID-19 within the Australian population.

The wellbeing of its employees, contractors and local communities remains Mount Gibson’s primary consideration. Accordingly, the Company has implemented a range of measures across its business consistent with advice from state and federal health authorities. The measures are particularly stringent for the Koolan Island operation given the Kimberley region is subject not only to the Western Australian Government’s travel restrictions but also to Federal Government biosecurity requirements.

These measures have included stringent pre-travel screening and documentation, detailed social distancing during travel and at site, enhanced cleaning and personal hygiene measures, extended rosters to minimise travel, relocation of interstate personnel to WA, and replacement of commercial flights for Koolan Island personnel with dedicated air charter services. Site manning levels have also been reduced since mid-March by deferring non-essential work and implementing a freeze on interstate recruitment.

Mount Gibson’s iron ore operations on Koolan Island in the Kimberley region, and at Extension Hill and the Geraldton Port in the Mid-West region, have consequently been able to continue albeit with increasing travel and operating constraints resulting in additional costs. This includes increased expenditure associated with bringing forward procurement of critical spares and consumables to avert potential supply chain interruptions.

OPERATIONS

Sales of high grade Direct Shipping Ore (DSO) from Koolan Island totalled 0.44 Mwmt in the March quarter. In addition, 0.59 Mwmt of low grade material from Extension Hill was shipped from the Geraldton Port in the quarter.

Mount Gibson is pleased to report that, notwithstanding the current global uncertainty, its customers have all continued to perform their obligations under its various offtake agreements for both its Koolan Island and Mid-West operations.

Koolan Island

A total of 3.7 Mwmt of ore and waste was mined at Koolan Island during the March quarter, a reduction of 9% from the prior quarter. This reflected the previously reported cyclone-related heavy rain events in January, further disruptions associated with additional cyclonic activity in late February and early March, and the necessary operational changes implemented as part of the Company’s COVID-19 response.

Ore production reflected the waste stripping schedule. As previously indicated, the planned elevated stripping phase of the mine, during which waste movement is at its highest and ore production at its most variable, is scheduled to be completed over the next 18 months. Thereafter, sales will rise and costs will decline in step with the significantly reduced waste to ore stripping ratio.

Ore production in the March quarter totalled 545,000 wmt, approximately 29% lower than in the preceding period. Ore sales in the quarter were in turn restricted to six shipments totalling 439,000 wmt of high-grade DSO fines, taking sales for the first nine months of the 2019/20 financial year to just over 1.8 Mwmt.

The average grade of shipments in the quarter was 65.6% Fe. Sales from Koolan Island are made under long term offtake agreements on FOB terms, with the sale occurring upon shipment loading at Koolan Island. At current spot prices for high grade iron ore and based on the average life-of-mine product grade of approximately 65.5% Fe, each Panamax cargo has a gross value of approximately $9 million FOB.

Notwithstanding the reduced physical performance, Koolan Island generated operating cashflow of $15 million in the quarter before capitalised waste stripping investment of $16 million and initial construction costs on the new airstrip of $5 million. The net site cashflow was a deficit of $6 million.

Mining performance improved during March as mine planning and scheduling initiatives have been progressively implemented. As noted in Mount Gibson’s operational update released to the market on 30 March 2020, mining and ore production are expected to improve further in the June 2020 quarter, subject to there being no further interruptions related to COVID-19 or significant adverse weather events.

Geotechnical works on the island-side Main Pit footwall (i.e. depressurisation drilling, cable bolting, shotcreting and installation of safety mesh) have also proceeded well. Seawall (hanging wall) instrumentation and monitoring data continues to demonstrate that the new seawall, which incorporates the installed impermeable seepage barrier and has been under full tidal loads for well over one year, is safe and performing to design expectations.

The site also successfully loaded its first Kamsarmax-class bulk carrier during March. These vessels are capable of carrying up to approximately 80,000 wmt relative to conventional Panamax vessels of approximately 72,000 wmt. Further use of these vessels may facilitate some modest shiploading and transport efficiencies.

Infrastructure Investment - Airstrip

As previously reported, in the December 2019 quarter the Company approved construction of a new 2.1 kilometre sealed all-weather airstrip in the centre of the Island, with estimated construction and commissioning costs of $20 million.

This new airstrip is expected to deliver significant safety and efficiency benefits to the operation by enabling direct flights by jet aircraft from Perth. This will reduce average transit times for Perth-based employees, helping minimise fatigue and improve general employment conditions. It will also deliver operating cost benefits over the life of the operation. Regular charter flights to/from Broome and Derby will be maintained to accommodate the ~20% of site personnel residing in the local region.

The onset of the global COVID-19 pandemic has further demonstrated the value of this development, which will eliminate the need for most of the Koolan Island workforce to transit through Broome. The new airstrip is now considered a key element of Mount Gibson’s longer term COVID-19 management plan.

Construction of the airstrip is proceeding well, with initial flights presently anticipated for October this year. Opportunities to expedite the schedule of this project are being pursued.

Mid-West Operations – Extension Hill

Mount Gibson commenced the existing low-grade sales program from the Extension Hill mine site in June 2019. Sales since that time have totalled nearly 2.2 Mwmt. Cashflow from the program is modest but these sales will also assist in final site rehabilitation works.

Sales in the March quarter were in line with plan totalling approximately 587,000 wmt, comprising 233,000 wmt of low-grade lump material and 354,000 wmt of low-grade fines. Cashflow for the quarter totalled $5 million including $2 million from the ongoing rail credit refund. Sales for the nine-month period have totalled 1.9 Mwmt. Marketing to further extend the program has resulted in sales arrangements recently being finalised for the balance of the financial year. Possible further sales beyond that point are under investigation.

Operations in the Mid-West continue to proceed well and costs remain in line with plan. Recently introduced regional travel restrictions to limit the spread of COVID-19 are not at this stage anticipated to significantly impact the Mid-West operations, however this will be further assessed over time.

Quarterly Operating Statistics

 

Mar-19

Jun-19

Sep-19

Dec-19

Mar-20

2019/20

Quarter

Quarter

Quarter

Quarter

Quarter

YTD

KOOLAN ISLAND

(kwmt)

(kwmt)

(kwmt)

(kwmt)

(kwmt)

(kwmt)

Mining & Crushing

 

 

 

 

 

 

Waste mined

4,148

3,588

2,985

3,276

3,113

9,374

Ore mined

8

544

651

763

545

1,959

Ore crushed

5

425

661

722

432

1,815

Shipping/Sales*

 

 

 

 

 

 

Standard DSO Lump

-

-

-

-

 

 

Standard DSO Fines

-

370

664

733

439

1,836

Total

-

370

664

733

439

1,836

MID-WEST

 

 

 

 

 

 

Mining & Crushing

 

 

 

 

 

 

Waste mined

-

-

-

-

-

-

Ore mined

-

-

-

-

-

-

Ore crushed

57

385

882

694

484

2,060

Shipping/Sales*

 

 

 

 

 

 

Standard DSO Lump

254

-

-

-

 

 

Standard DSO Fines

148

-

-

-

 

 

Low grade Lump

-

120

473

478

233

1,184

Low grade Fines

-

118

238

172

354

763

Total

402

237

711

649

587

1,948

CONSOLIDATED DATA

 

 

 

 

 

 

Shipping/Sales*

 

 

 

 

 

 

Standard DSO Lump

254

-

-

-

-

-

Standard DSO Fines

148

370

664

733

439

1,836

Low Grade Lump

-

120

473

478

233

1,184

Low Grade Fines

-

118

238

172

354

763

Total

402

607

1,375

1,382

1,026

3,784

kwmt = thousand wet metric tonnes.

* Mount Gibson ships in Panamax vessels which contain an average of 60,000 wmt from Geraldton Port in the Mid-West, and generally 72,000 wmt from Koolan Island.

Minor discrepancies may appear due to rounding.


(To contact the reporter on this story: cody.wang@steelhome.cn or 86-555-2238837 18725550282)
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