Koolan Island idled on Mount Gibson orders
PERTH (miningweekly.com) – Iron-ore junior Mount Gibson has placed its embattled Koolan Island mine, in the Kimberley region, on care and maintenance to preserve capital while it conducted an evaluation of the project.
Operations in the Main pit were temporarily suspended last month as a precautionary measure to allow the company to monitor and repair an area of instability in the upper part of the southern pit wall.
All nonessential activities were also suspended last week following a further slump in the Main pit seawall, which interrupted geotechnical repairs at the site.
Mount Gibson launched an evaluation of the situation and stood down the majority of its workforce.
The miner told shareholders on Friday that a decision was taken to reduce expenditure and preserve capital at Koolan Island, prompting the miner to place the operation on effective care and maintenance until such time as a detailed assessment of potential options for the operation were completed, and a definitive decision on the mine’s future could be made.
The evaluation would include the likely timing and cost of a range of options to rebuild the Main pit seawall and resume production.
The options would then be considered in the context of the outlook for the iron-ore market, iron-ore prices and exchange rates, as well as on the basis of what action would best preserve and create value for shareholders.
The miner said a decision to resume production at the Koolan Island operation would only be made if the company believed the option to be viable.
Meanwhile, as a consequence of placing the mine on care and maintenance, the majority of the Koolan Island workforce would be made redundant, costing the company some A$11-million.
Mount Gibson has also entered into discussions with its insurers.
The miner had a cash reserve of some A$360-million at the end of November, and minimal debt.
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