PERTH (miningweekly.com) – Iron-ore miner Mount Gibson Iron on Wednesday warned of a noncash impairment of between A$850-million and A$950-million in its interim results for the period ended December.

The impairment comes in light of the declining market conditions, as well as recent development at Mount Gibson’s Koolan Island project, which was idled in December last year.

“The December quarter was particularly challenging for Mount Gibson, in light of the continued decline in iron-ore prices to five-year lows and the failure of the Koolan Island seawall,” said CEO Jim Beyer.

“These factors have necessitated significant reductions in the company’s workforce and, unfortunately, will require a substantial noncash impairment to be recorded in our upcoming half-year financial results next month.”

However, Beyer noted that the company remained in a strong financial position, with substantial cash reserves and negligible debt.

“We have responded diligently and promptly to preserve capital and further reduce costs while we assess the potential way forward at the Koolan Island operations.

“With efforts at Extension Hill continuing to focus on efficiencies and unit cost reductions to ensure the operation maintains a positive cash flow, and near-term expenditure significantly reduced at Koolan Island and the Perth office, Mount Gibson has significantly greater flexibility to adapt to changing circumstances,” Beyer said.

Meanwhile, Mount Gibson on Wednesday reported that iron-ore sales during the three months to December reached 1.2-million tonnes, while half-year sales reached 3.1-million tonnes.

The December quarter sales were down from the 1.86-million reported in the previous quarter, and reflected reduced sales from the Koolan Island operations, where mining from the main pit was suspended in October.

Revenue for the quarter reached A$72-million free-on-board.

The miner said that additional mining and existing stockpiles from the Acacia East pit, on Koolan Island, was expected to supplement ore sales during the second half of 2015, with the company on Wednesday increasing the 2015 sales guidance range to between 4.8-million tonnes and 5.2-million tonnes.