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Mount Gibson suspends Shine iron-ore mine

1st October 2021

By: Mariaan Webb

Creamer Media Contract Publishing Editor

     

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Australian iron-ore junior Mount Gibson’s stock traded lower on Friday, as the company sid that the Shine mine at Koolan Island, in Western Australia, would be ramped down and suspended after a planned shipment at month-end.

The decision reflected a rapid deterioration in iron-ore prices, particularly for lower-end medium-grade ores and significantly increased shipping freight charges, the ASX-listed company said.

Shipping freight rates from Geraldon port to China have doubled from under $15/t to more than $30/t, coupled with relatively high road transportation costs in the Mid-West given the distances involved.

Iron-ore prices also plummeted through August, falling by about $100/t to as low as $94/t by mid-September for 62% iron, after China called for caps on steel output. The discounts and penalties for medium and lower grade iron-ore products have widened significantly.

Mount Gibson stated that it would continue ore mining and processing over the next month to facilitate a shipment at the end of October, following which the site would be placed on care and maintenance, pending an improvement in iron-ore market conditions.

“This is a disappointing decision for the company, given that the Shine mine is in its first year of operation. However, it is a commercially sensible one necessary to limit cash outflows and preserve the future optionality of the Shine deposit,” said the miner.

Mount Gibson’s stock traded at A$0.44 a share on Friday.

On September 22, junior GWR suspended mining operations at its C4 iron-ore mine, also in Western Australia, for a period of 30 days to review its costs and iron-ore pricing.

Edited by Creamer Media Reporter

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