PERTH (miningweekly.com) – Junior iron-ore miner Mount Gibson Iron swung into the red during the 2015 financial year, as iron-ore prices fell and the miner was forced to cut back production following the failure of a seawall at its Koolan Island operation in December 2014.

An underlying loss of A$13.9-million was reported, before impairment, for the financial year ended June, compared with a gross profit of A$173-million in 2014. A net loss after tax of A$911.4-million included an impairment charge of A$945.2-million and compared with a net profit of A$96.4-million in 2014.

“The year was clearly a very challenging and disappointing one for Mount Gibson, with the large fall in iron-ore prices and impacts of the seawall failure at Koolan Island resulting in very significant financial losses for the company and all shareholders,” said CEO Jim Beyer.

Iron-ore sales volumes declined from the 9.7-million tonnes sold in 2014, to 5.8-million tonnes in the year under review, while revenue declined from A$898-million to A$325-million.

However, Beyer pointed out that Mount Gibson’s decisive and ongoing cost reduction and optimisation initiatives had been critical in helping to stabilise the business in the latter part of the year and, in turn, preserve substantial financial capability and flexibility to adapt to the difficult conditions.

Corporate and administrative costs were reduced by some 50% during the year to A$1.2-million a month. Mount Gibson was targeting a further 20% saving to below A$1-million a month in the latter half of the calendar year.

Cost reductions were also targeted at mine site, with the Extension Hill site costs reducing by 15% over the year, to an average of A$44/t during the June quarter. Mount Gibson was operating the mine at an increased output rate of between 3.5-million and 4-million tonnes a year and progressing the development of the new Iron Hill mineral resource to extend the operational life of the mine beyond its current reserve life of late 2016.

Mining at the Koolan Island’s Acacia East satellite pit was also expected to restart in the first half of 2016, to reclaim 700 000 t of remnant ore, after which the site would be placed on care and maintenance. The miner would also undertake detailed work to investigate the redevelopment potential of Koolan Island’s main pit orebody.

For the 2016 financial year, Mount Gibson expected iron-ore sales to reach between 4-million and 4.5-million tonnes, at an all-in cash cost of between A$50/t and A$54/t free-on-board.