Insurance claim boosts MGX's profit
Insurance claim is more profitable than proceeds from mining! Still, they have come from a negative FY2015 cash flow from operations of $91.1 m to a positive $5.7 m this FY2016.
They have received $86 m as cash settlement, no restrictions imposed on deployment of settlement funds, business interruption component still progressing and $1.5 m committed to complete detailed seawall design and mine planning and have a cash balance of some $400 m.
Lots of uncertainties remain, but seems undervalued.
From their ann........
Underlying $19.4 million gross profit1 comprising an underlying $13.4 million gross profit from continuing
operations after administration and finance costs, and a profit of $6.0 million from the discontinued Tallering
Reported statutory net profit after tax of $86.3 million (FY2015: $911.4 million loss), including settlement of
the property damage component of the Koolan Island insurance claim, and after non-cash net impairment
charges of $15.4 million.
Full year sales revenue of $240 million (FY2015: $325 million) on iron ore sales of 5.0 million wet metric
tonnes2 (Mwmt) (FY2015: 5.8 Mwmt).
Cash, term deposits and liquid investments of $400 million at 30 June 2016 (30-June-2015: $334 million),
including $51 million in insurance settlement proceeds received by year end, with the balance received in July.
Total Cost of Goods Sold (COGS) of $44/wmt Free on Board (FOB) (FY2015: $62/wmt).
All-in cash cost3 of $46/wmt FOB for the year, in line with guidance (FY2015: $62/wmt).
Full year cashflow from operations of $5.7 million (FY2015: negative $91.1 million).
$86 million cash settlement agreed for the property damage component of the Koolan Island seawall insurance
claim, independent of the business interruption component which is progressing.
FY2017 sales guidance of 2.8 to 3.1 Mwmt at an all-in cash cost3 of $48-52/wmt FOB.
Conditional EPA approval recommendation received for the Iron Hill Project, with final approvals targeted by end
2016 to allow production to start in early 2017.
Mount Gibson iron, signs first offtake agreement for supply of iron ore.//
25 November 2016
Mount Gibson signs second iron ore offtake agreement for Iron Hill
Mount Gibson Iron Limited (“Mount Gibson”) is pleased to advise that it has entered into an offtake
agreement with China-based Xinyu Iron and Steel Group Limited (“Xinyu”) for the purchase of approximately
one quarter of the first year’s available production planned from the Company’s Iron Hill iron ore deposit,
near the existing Extension Hill mine in the Mid West of Western Australia.
Xinyu is the purchasing agent for two mainland China steel producers, Yancheng Steel Tube Co. Ltd and
Shandong Zhongfa Steel Co. Ltd., and currently handles approximately 3 million tonnes of iron ore annually.
Terms of the 12 month offtake agreement include market reflective pricing referenced to the Platt’s 62% Fe
Index price, and market-typical lump premium and impurity penalties, on a Cost and Freight (CFR) basis.
The agreement is the second iron ore offtake agreement signed for the Iron Hill deposit1, taking contracted
sales volumes to approximately one half of available production in the first year of operation.
As previously indicated, Mount Gibson is in advanced discussions with other prospective customers with a view to securing offtake commitments for up to 80% of available annual production from Iron Hill.
Consistent with existing sale arrangements for Extension Hill, Mount Gibson intends to market the uncommitted proportion directlyto spot customers on a cargo by cargo basis.
The Xinyu agreement remains conditional upon regulatory approvals and project completion being achieved
by 30 June 2017.
As previously indicated, subject to receipt of final regulatory approvals, Mount Gibson aims to start
development of the Iron Hill project in time to commence sales when remaining stockpiles of standard
hematite from Extension Hill are exhausted in the first half of calendar 2017.
Mount Gibson Chief Executive Officer Jim Beyer said: “It is pleasing to have now signed agreements for
approximately half of our anticipated first year production from the Iron Hill deposit, and we welcome Xinyu
as a new major offtake customer.”
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