Earnings call transcript: Mount Gibson Iron Q1 2025 sees stock rise 4.95%

Mount Gibson Iron Ltd (MGX) reported its earnings for the first quarter of 2025, showcasing a robust financial performance and strategic expansions. The company’s stock saw a notable increase of 4.95%, reflecting investor optimism. The earnings call highlighted significant achievements in production and strategic investments, alongside a promising outlook for the coming fiscal year. According to InvestingPro data, the company has demonstrated strong momentum with a remarkable 111% price return over the past six months, while maintaining a "Fair" overall financial health score of 2.27 out of 3.

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Key Takeaways

• Mount Gibson Iron reported quarterly sales revenue of AUD 75 million.
• The company completed a strategic acquisition in the Central Tanami Gold Project.
• A significant increase in total material movement was recorded, with a 20% rise.
• The stock price increased by 4.95% following the earnings announcement.
• The company plans a name change to MGX Resources Limited.

Company Performance

Mount Gibson Iron demonstrated strong performance this quarter, driven by increased production and strategic investments. The company completed the acquisition of a 50% interest in the Central Tanami Gold Project, marking a significant step in its diversification strategy. Additionally, total material movement increased by 20%, and the ore production reached 540,000 tonnes, reflecting operational efficiency. InvestingPro analysis shows the company holds more cash than debt on its balance sheet, with a healthy current ratio of 6.36x, indicating strong liquidity to support its expansion plans.

Financial Highlights

• Revenue: AUD 75 million for the quarter.
• Cash operating costs: AUD 61 million, with an average cost of AUD 111 per tonne FOB before royalties.
• Group cash outflow: AUD 3 million.
• Cash and investments balance: AUD 473 million, approximately AUD 0.40 per share.
• Strategic investment portfolio increased by AUD 12 million.

Market Reaction

Following the earnings announcement, Mount Gibson Iron’s stock price rose by 4.95%, closing at AUD 0.455. This movement places the stock closer to its 52-week high of AUD 0.48, indicating strong investor confidence. The increase reflects positive sentiment towards the company’s strategic direction and operational performance. InvestingPro data indicates the stock is currently trading near its 52-week high, with RSI suggesting overbought conditions. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels.

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Outlook & Guidance

Looking ahead, Mount Gibson Iron targets sales of 3,000,000 to 3,200,000 tonnes for FY2026, with an average cash operating cost of AUD 80-85 per tonne. The company is focusing on expanding its presence in precious and base metals, with a development decision for the Central Tanami Gold Project expected in the next 12 to 18 months.

Executive Commentary

CEO Peter Kerr expressed enthusiasm about the company’s strategic moves, stating, "We’re excited about completing and moving ahead with our $50,000,000 acquisition of a half interest in the Central Tanami gold project." He further emphasized the company’s future direction, saying, "We look forward to forging an exciting path as MGX Resources to build a high quality Australian precious and base metals business."

Risks and Challenges

• Market volatility in iron ore prices could impact revenue.
• Operational risks related to the integration of new acquisitions.
• Potential delays in the development of the Central Tanami Gold Project.
• Fluctuations in foreign exchange rates affecting financial performance.

Mount Gibson Iron’s Q1 2025 earnings call highlighted its strategic advancements and operational successes, with a clear focus on growth and diversification. The positive market reaction underscores investor confidence in the company’s future prospects.

Full transcript - Mount Gibson Iron Ltd (MGX) Q1 2026:

Lisa, Conference Moderator, Mt. Gibson Ion: Thank you for joining today’s teleconference for the release of Mt. Gibson Ion’s September activities report. Mt. Gibson Chief Executive Officer, Peter Kerr, will be leading the discussion, and he’s joined by Chief Financial Officer, Jill Dobson and External Relations Manager, John Fazius. Mr.

Kerr will provide a brief overview, after which there’ll be an opportunity to ask questions. Due to time constraints, only institutional participants will be invited to ask questions at that time. A recording of the call will also be available via the Mt Gibson website shortly after the completion of today’s teleconference. Thank you, and go ahead please, Peter.

Peter Kerr, Chief Executive Officer, Mt. Gibson Ion: Thanks, Lisa. Good morning, everyone, and thank you for joining us to discuss Mt. Gibson’s September 25 quarterly report. As usual, I’ll give a brief overview before handing back to Lisa for any questions. And just as a reminder, all currency we mentioned on the call is denominated in Australian dollars unless otherwise stated.

So the September was much as we had flagged. Shipments were steady while we completed the last phase of bulk stripping in the eastern end of the main pit at Coolin Island and to set the mine up for increased production and sales in the coming twelve months, its final twelve months of operation. As expected, we drew down marginally on the group’s cash reserves during the quarter, and we now expect to reverse that situation as production lifts progressively and cash costs reduce. Operationally, we remain focused on safely maximizing shipments and cash flow from Coolman Island over the next twelve months. In addition to this, we’re also excited about completing and moving ahead with our $50,000,000 acquisition of a half interest in the Central Tanami gold project.

As we said on our last call, we view this transaction as an attractive opportunity to advance one of Australia’s larger and highest grade undeveloped gold projects to a development decision within twelve to eighteen months. It also represents a critical step in our broader strategy to reposition the company as a diversified long last minerals producer. Firstly, in relation to safety, while our positive safety performance generally continued, we did unfortunately incur a small number of avoidable restricted work and medically treated injuries during the quarter. Reporting practices are very good on the site. Importantly, the lost time injury frequency rate remains at zero incidents per one million man hours worked.

And our total recordable injury frequency rate increased from two point three to four point eight injuries per 1,000,000 man hours worked. Overall safety performance remains favorable when compared with any of the available industry benchmarks. But of course, any increase is unwelcome for us and all of our teams are applying significant effort to maintain our broader long standing trend of continuous improvement. At Coolin Island, as I noted in my intro, the quarter was largely as we expected, while we completed the final phase of bulk stripping in the eastern end of the pit. We also finished the remedial ground support work in the rockfall zone on the central footwall, and that’s allowed us to start extracting the high grade iron ore below that area.

Consequently, total material movement increased by 20% to 2,600,000 tonnes in the quarter, while ore production reduced to 540,000 tonnes and the waste to wall strip ratio increased by 30% compared with last financial year and it averaged 3.9 tonnes of waste to one tonne of ore in the quarter. With that overburdened stripping now complete, the strip ratio will progressively reduce to average around one:one over the remaining life from here onwards, while iron ore production will build over that time. That should result in a substantial corresponding reduction in unit cash costs over that period. Processing for the quarter was in line with mining production and we completed seven shipments totaling 550,000 tonnes grading 64.3% FE. Two shipments were completed in each of July and August and then three in September as we started to step up rates.

Three of those seven shipments were medium grade, which is actually a bit of a misnomer, for us because our medium grade is around 63 to 63.5% FE, which is still very high for others. And that was because we had some stockpile blend available, which worked in this market. Going forward, we expect run of mine grades to remain around 65% FE with the occasional sale of a 63% or 63.5% cargo to take advantage of available stockpiles and market conditions. Our remaining ore reserves of 4,100,000 tonnes at 65 FE at June 30, which we announced to the market on the October 6, will say mining and sales conclude a year or so from now subject to any delays arising from the coming Northern Australian wet season. We continue to track toward our sales target for this financial year, that’s fiscal twenty twenty six, of 3,000,000 to 3,200,000 tonnes at an average cash operating cost of AUD 80 to 85 per tonne equivalent to roughly US50 to AUD 55 per tonne FOB before royalties.

In terms of pricing, it was good to see a modest uplift in the quarter. The benchmark index for 62% FE iron ore funds rebounded to average US102 dollars per tonne CFR, and that was up from US98 dollars per tonne in the prior quarter. And the benchmark high grade 65% FE index averaged US117 dollars a tonne CFR compared with $108 in the prior quarter. The grade adjusted premium when you compare the 65% FE price and the $62 FE price averaged 9.8% in the quarter, which was welcome, and that was up from 5.7% previously. After shipping costs of approximately US12 dollars per tonne on the journey from Kulin to Northern China and normal penalties for impurities, which are primarily silica related for us, we realized an average price for the quarter of US92 dollars per dry metric ton FOB, and that compared with US68 dollars in the prior quarter, which back then was affected by substantial downward provisional pricing adjustments.

Encouragingly, iron ore prices are proving resilient at current levels and we look forward to increasing the mines production and cash flow in future quarters. Reflecting the temporary lower sales and increased waste mining movement, Coolin Island incurred a modest cash outflow of $4,000,000 in the quarter, comprising sales revenue of $75,000,000 less cash operating costs of $61,000,000 equated to an average of $111 per tonne sold FOB before royalties. We also incurred capitalized waste mining costs of 9,000,000 some project work of $2,000,000 which was mainly related to the football remediation finish and WA government and third party mineral royalties of $7,000,000 At a group level, cash outflow totaled $3,000,000 and that comprised the $4,000,000 outflow that I just mentioned from Poland. Corporate and exploration cost of $4,000,000 and that was all offset by $5,000,000 in interest and other income. On top of all that, we also had a $12,000,000 increase in the market value of the company’s strategic investment portfolio.

And when combined with our working capital outflows reflecting the timing of receipts and payments, The company’s cash and investments balance at the end of the quarter remained a robust $473,000,000 and that’s the equivalent of about $0.40 per share. And Mt Gibson has no bank debt. Turning now to our growth strategy and the recent announcement of our acquisition of 50% of the Central Tanami Gold Project from Northern Star Resources. We’ve spoken about this important move previously, so I’ll avoid being repetitive here. Other than to say, we’re really excited about the opportunity.

Timing of the transaction looks very good. It looks like compelling value and is at attractively priced entry points to the gold sector, particularly given recent gold price movements, which of course many people, had not foreseen. And with substantial resource upside at that project, we can leverage our operating experience and our strength in remote site operations from our team. As many of you all know, we need to satisfy three key conditions by the March next year for the transaction. And ideally, we do that much sooner.

And they are the non exercised by the remaining joint venture partner, that’s Tanami Gold, and that was already done, some time ago. Foreign Investment Review Board approval, which is well underway, and we will update the market as and when we receive communication from the firm team in Canberra and a further extension of existing infrastructure arrangements on one tenement by the Central Land Council in the Northern Territory. Once the acquisition settles, we intend to work closely with Tanami Gold to position within the joint venture for a development decision within twelve to eighteen months. It’s also important to note that pursuant to our agreement with Northern Star, the existing joint venture partners continue to progress resource definition and technical study work and that’s resulted in Tanami Gold itself releasing a number of positive drilling results since we announced our transaction. So we’re very much looking forward to getting the keys so we can get to work using our existing funding capacity and our existing strong supportive relationship for both Tanami Gold and Mt.

Gibson of a common major shareholder. In relation to our other investments, the portfolio value has continued to build, increasing to approximately $31,000,000 at quarter end, of which roughly half reflects our near 5% interest in Queensland copper producer, AIC Mines. Subsequent to quarter end, we also contributed $1,500,000 to an equity placement by Queensland based metals mine developer, Marrone and Mint Metals, and that lifted our holding in that company to 5.1%. These investments are in addition to the 9.7% shareholding held in Midwest iron ore producer, Phoenix Resources. That shareholding arose from our Midwest assets divestment transaction back in 2023.

And the value of that shareholding at quarter end was approximately 35,000,000 We’ve also expanded our regional exploration portfolio, notably in the Edmond Basin in Western Australia’s Gaskewin region, an area that’s highly prospective for precious and base metals, but has been largely unexplored due to its remoteness. So we’ve assembled a land position there covering over 1,600 square kilometers in which we’ve already undertaken extensive reconnaissance mapping, sampling and airborne magnetics, And we have an airborne gravity survey scheduled to commence shortly in order to help us plan for drilling in 2026. Corporately, our on market share buyback program of up to 10% of the company’s issued shares was necessarily paused back in April, while our negotiations with Northern Star on the Tanami transaction advanced. And at that point in time, we had bought back 38,800,000.0 shares or approximately 3.2% of the company’s issued shares at a little over $0.31 per share. So this has obviously proved to be an accretive investment for shareholders.

And since that time, we’ve extended the program by a further twelve months to thirty September twenty twenty six. And before I wrap up, I’d also like to highlight an important item on the agenda of our coming AGM on the November 12, which underlines our new direction. At that meeting, we’ll be asking shareholders to approve a change of name to MGX Resources Limited. We think it’s an opportune time for the change and it better reflects our new direction with Coolin Island due to come to an end later next year and our center of gravity moving into gold and base metals. Importantly, by aligning our name and our ticker code we’ve had since we listed back in 02/2002, we’ve retained recognition with investors as well as continuity with the organization’s history.

So in summary, operationally, we remain focused on safely maximizing production over Coolin’s remaining twelve months, and we’re targeting to contribute substantial cash flow to our business over that period. And secondly, of course, we’re working to close out the Central Tanami Gold Project acquisition as quickly as we can and that will enable us to get to work with our joint venture partner and accelerate the activities necessary for a development decision. So this is an environment where structural investment changes are occurring in precious metals and gold prices are expected to remain strong. Finally, we look forward to forging an exciting path as MGX Resources to build a high quality Australian precious and base metals business. So with that, Lisa, if I could hand back to you for any questions that may arise.

Lisa, Conference Moderator, Mt. Gibson Ion: Thanks, Peter. We have no questions.

Peter Kerr, Chief Executive Officer, Mt. Gibson Ion: Okay. Thanks, Lisa, and thank you all for all of you on the call. If you do have questions or queries in relation to our outputs, please don’t hesitate to call. The numbers are in the release, and have a good day. Thank

Lisa, Conference Moderator, Mt. Gibson Ion: you.

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