PERTH (miningweekly.com) – Junior iron-ore miner Mount Gibson has been firmly focused on cost performance, with the ASX-listed company reporting that all-in group cash costs for the three months to December had dropped from the A$52/t reported in the September quarter to A$47/t.

“In the face of extremely tough market conditions in the December quarter, during which prices fell to their lowest level in a decade, it was a significant achievement to add to our cash reserves through continued strong operational performances at Koolan Island and Extension Hill,” said Mount Gibson CEO Jim Beyer.

“Nonetheless, the extreme market volatility now prevailing demands that we continue to act prudently to protect our business and preserve value for shareholders.”

During the quarter under review, ore shipments from the Koolan Island operation reached 518 000 t, an increase of 75% over the previous quarter.

The increase reflected the production profile of the Stage 2 and 3 mining campaigns, in which production and sales were weighted towards the December and March quarters, following a focus on pre-stripping and inventory build in the preceding September quarter.

The Extension Hill mine shipped one-million tonnes of ore, with Beyer adding that the mine remained cash flow positive for the quarter, reflecting the ongoing focus on cost reduction and efficiency improvements, as well as the strong contribution from lump sales.

“We have acted to implement operational changes at Extension Hill to provide sales flexibility while controlling unit costs. This positions us to be able to preserve the value in a low iron-ore price environment as we look ahead to the planned development of the Iron Hill deposit, subject to securing all relevant regulatory approvals,” Beyer said.

Ongoing optimisation work has allowed Mt Gibson to flex production at Extension Hill between three-million and four-million tonnes a year, to reduce gross expenditure with no material change in group unit costs.

Beyer said that this would allow the company to better optimise the intended transition in production from the existing Extension Hill pit to the future planned pit at Iron Hill.

Adjusting the mining rate could also potentially extend the operational life of the Extension Hill openpit mine to early 2017, subject to there being no further material and sustained deterioration of market conditions.