Earnings call transcript: Mount Gibson Iron Q4 2025 highlights strategic shift

Mount Gibson Iron Ltd (MGX) reported its Q4 2025 earnings, showcasing a strategic pivot towards diversification and growth despite the absence of earnings forecasts. The company’s shares rose by 5.33% following the earnings call, closing at 0.395, up from its previous close of 0.375. According to InvestingPro data, the stock’s RSI suggests overbought territory, though analysis indicates the shares remain undervalued relative to their Fair Value. With a market capitalization of $69.81M, MGX has shown strong momentum, trading near its 52-week high.

Key Takeaways

• Mount Gibson Iron’s cash flow for FY2025 reached AUD 29 million.
• The company acquired a 50% stake in Central Tanami Gold Project for AUD 50 million.
• Iron ore sales target for FY2026 is set at 3.0-3.2 million tonnes.
• The stock price increased by 5.33% after the earnings call.

Company Performance

Mount Gibson Iron demonstrated robust operational performance in Q4 2025, with a significant increase in ore mining and a reduction in the waste to ore stripping ratio. The company’s strategic investments and acquisitions signal a shift towards diversification, which appears to be well-received by investors. InvestingPro reveals the company maintains strong financial flexibility with a current ratio of 6.36, indicating ample liquidity to fund its strategic initiatives. Subscribers can access 12 additional ProTips and comprehensive financial analysis through the Pro Research Report.

Financial Highlights

• Total group cash flow: AUD 29 million for FY2025
• Revenue: AUD 359 million
• Cash operating costs: AUD 264 million
• Cash and investment balance: AUD 479 million (AUD 0.40 per share)

Market Reaction

Mount Gibson Iron’s stock surged by 5.33% post-earnings, closing at 0.395. This rise reflects investor confidence in the company’s strategic direction and operational efficiency. The stock’s performance is notable as it approaches its 52-week high, indicating strong market sentiment.

Outlook & Guidance

Looking ahead, Mount Gibson Iron aims to sell 3.0-3.2 million tonnes of iron ore in FY2026, with a cash operating cost target of AUD 80-85 per wet metric tonne. The Coolant Island mine is expected to continue operations until the first half of FY2027. The company also plans to make a development decision on the Central Tanami Gold Project within the next 12-18 months.

Executive Commentary

Peter, an executive at Mount Gibson Iron, emphasized the company’s focus on maximizing production and cash flow at Coolant Island. He also highlighted the strategic move towards diversifying into other conventional commodities and hinted at potential future investments.

Risks and Challenges

• Fluctuating iron ore prices could impact revenue.
• The transition into gold mining presents operational risks.
• Currency exchange rates may affect financial performance.
• The end of Coolant Island’s mine life could reduce production capacity.
• Global economic conditions might influence commodity demand.

Mount Gibson Iron’s Q4 2025 earnings call highlighted the company’s strategic initiatives and operational achievements, contributing to a positive market response. While InvestingPro data indicates challenges with current profitability and gross margins, the company’s focus on diversification and efficient resource management positions it well for future growth. Investors seeking deeper insights into Mount Gibson’s financial health and growth prospects can access the complete Pro Research Report, which transforms complex financial data into actionable intelligence.

Full transcript - Mount Gibson Iron Ltd (MGX) Q4 2025:

Peter, Executive (likely CEO/CFO), Mt Gibson: Thanks, Lisa. Good morning, everyone, and thank you for joining us to discuss Mt Gibson’s June 25 quarterly report. As usual, I’ll give a brief overview before handing back to Lisa for questions. And as a reminder, all currency that we mention on the call is in Australian dollars unless otherwise stated. The June was a fairly challenging one for the company, given weaker iron ore prices.

But despite that, we generated reasonable cash flow over the total year and completed the period in a strong position. Operationally, at Coolins, challenges included late season weather and some poor ground conditions, which meant that we fell one shipment short of our fiscal twenty twenty five financial year sales guidance, and that wasn’t helped by the fact that, that final vessel arrived on the last day of the quarter and loading wasn’t able to be completed until July. So that will be captured in this current financial year now. However, as we look forward, fiscal twenty twenty six has a very different and exciting feel about it. From an operating perspective, our focus will be going forward on safely maximizing cash flow from Kulin over the remaining twelve to eighteen months of its mine life.

And while our operating team is doing that, from a corporate and strategic perspective, we’ll obviously be focused on completing and then advancing the $50,000,000 acquisition of our half interest in the Central Tanami gold project that we announced recently. We see that 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 initial step in our broader strategy to reposition Mt Gibson as a diversified long life minerals producer, and more on that in a moment. Firstly, in relation to safety, we continued our good trend for the last few years. The rolling twelve month lost time injury frequency rate remained at zero incidents per 1,000,000 man hours worked.

And our total recordable injury frequency rate, which reflects lost time injuries as well as other forms of injury, finished the year at 2.3, which although that was up slightly in the quarter, is down from 4.4 at the start of the year. And safety is obviously a mindset and highly correlated with production performance, and our operation teams are continually focused on achieving improvements. Turning to Coolant Island operations. As I noted, we faced a number of challenges in the quarter, and as unseasonably late wet season rain events and related ground disturbance issues required careful management and caused delays in some of our mining, which meant we didn’t quite meet our internal targets, despite some very strong efforts from the team. In addition, the main issue was that weaker iron ore prices reduced our revenues and resulted in large adverse provisional pricing adjustments, which I’ll cover in a little more detail shortly.

Mining wise, total material movement was 2,200,000 tonnes, with ore mining increasing 22% on the prior quarter to 680,000 tonnes and the waste to ore stripping ratio reducing by about 10% to 2.2:one as planned. The full year mining movement totaled 9,500,000 tonnes, of which ore mining accounted for just over 2,300,000 tonnes. So the full year stripping ratio was three:one, and that reflected the in pit work involved with actually moving around the historic failure areas and transitioning production from the west end to the east end of the main pit. Importantly, we’re shortly to complete the remedial ground support work over the central footwall failure zone, and that will allow mining crews access to the underlying high grade ore in that area, as well as we’re about to complete removal of the former Eastern Hall ramp, and that’s on track in this current quarter. June ore processing lifted 14% to 811,000 tonnes, and over the total year was 2,600,000 tonnes.

Eight shipments were completed in the quarter, totaling 632,000 wet metric tonnes at an average grade of 63.9%, and that’s a little lower than our 65 previously because we did blend some materials to lift volumes and sell into a market that was well priced for slightly lower grade material. And that resulted in fiscal twenty twenty five sales of 2,610,000 tonnes at an average grade of 64.5% tepe. And importantly, following the final phase of waste movement in the current September, we anticipate a stronger performance through fiscal twenty six to the end of Coolin Island’s mine life, which is presently anticipated to occur in the first half of the fiscal twenty twenty seven financial year, so in late twenty twenty calendar 06/2026 calendar year. For fiscal twenty twenty six, we’re targeting sales of 3,000,000 to 3,200,000 tonnes, that’s 1,000,000 wet metric tonnes at an average cash operating cost of AUD 80 to AUD 85 per wet metric tonne FOV. In relation to iron ore pricing, the benchmark 62% FE index further weakened and averaged USD 98 per dry metric ton, CFR, so that includes shipping freight in the quarter, down from USD 104 a ton previously.

The price actually dipped as low as USD 93 a ton and remained below the $100 level for most of the quarter amid the various global economic and geopolitical tensions that we’ve all seen. Positively, the 62 index iron ore price has recently moved back up to around USD103 a tonne, And the high grade 65 index, which is relevant for us, and averaged at USD108 in the quarter, is now sitting around USD10 higher than that at USD118 per dry metric tonne. This means that the high grade premium has, in recent days, lifted from the June average of 5.7% to around 9% today. Given the weaker prices in the quarter and the fact that our offtake agreements are based on final pricing one to two months after the shipment departure, the company incurred substantial adverse provisional pricing adjustments on prior and early current period shipments totaling AUD14 million, and that was the equivalent of AUD14 per tonne that we shipped. This resulted in a 29 reduction in the average realized price of Coolin Island fines to US68 dollars per dry metric tonne, and that’s on FOB terms, so that’s not including shipping freight in the quarter.

And most strengthening sorry, also I should say that modest strengthening of the Australian dollar was also unhelpful. It averaged US0.641 dollars in the period compared with US0.627 dollars in the previous quarter. So given the weather and in particular the pricing challenges, Coolant Island incurred an operating cash outflow of $15,000,000 in the quarter, and that comprised the ore sales revenue of GBP 65,000,000 after the adverse provisional pricing adjustments I’ve just mentioned, less cash operating costs of GBP 72,000,000, capital projects of $2,000,000 relating mostly to the footwall remediation works and government and third party royalties of $6,000,000 On a per tonne sold basis, cash operating costs averaged AUD114 per metric tonne, and that reflected the shipping volume. But it’s also worthy to note that the actual unit cost of the operations, mining, logistics and administration activities actually reduced by 11% per tonne mined in the quarter, which was a good result from the team. For the full financial year, Cooleon generated cash flow of $26,000,000 overall, and that comprises revenue of $359,000,000 cash operating costs of $264,000,000 and that equates to, for the full year, a unit’s cash operating cost of $101 per tonne that we sold.

We also spent $24,000,000 through the year on capitalized waste mining costs, capital projects of $13,000,000 and the total mineral royalties we paid were 32,000,000 On an overall group basis for the full fiscal 2025 financial year, total cash flow generated was GBP 29,000,000 overall, and that comprised the GBP 26,000,000 figure from Coolant Island I just mentioned as well as interest and other income of $22,000,000 and less corporate admin and exploration costs of $19,000,000 After favorable working capital movements and $2,000,000 of share buyback purchases in the June, the company’s total cash and investment balance increased to AUD479 million at thirty June twenty five, which is equivalent to approximately AUD0.40 per share. Turning now to our growth strategy and the recent announcement of our acquisition of 50% of the advanced Central Tanami gold project from Northern Star, which is obviously an exciting development for us. For some time now, we’ve been seeking to diversify into other conventional commodities, which have both a positive longer term fundamental picture and which are not largely dependent on a single country market. This acquisition is an opportunistic one to enter the gold sector for an attractive price and to build a profitable gold business.

It’s obviously a significant step for Mt Gibson, and we’re seeking to satisfy the transaction’s conditions, particularly further approval and to complete the acquisition as promptly as possible. Many of you were on our call about this transaction last week, so I won’t rehash the detail. But in short, for GBP 50,000,000, we’re acquiring a half stake in 2,100 square kilometers of granted and applications and mining and exploration tenements in the Central Tanami region, and that’s just to the Northwest of Newmont’s large Kelly gold operation. The Central Tanami project joint venture, in which Tanami Gold NL holds the other 50%, currently hosts Jawp twenty twelve resources of 1,600,000 ounces, grading 3.6 grams per tonne gold, and work’s underway to assess a further 1,000,000 ounces in historical resource estimates and to bring those in line with modern JORC standards. In value terms, we’re entering the joint venture for an attractive resource multiple of AUD 61 per ounce of mineral resource, or if you include the historical estimates, that comes down to around $38 per ounce.

That’s a very favorable set of numbers compared to recent industry averages, as we outlined in our transaction documentation last week. Plus, there is strong potential for resource growth through more drilling. The joint venture also includes a non operating 1,200,000 tonne per annum carbon in leach processing plant, and it has been idle since 02/2005, but it is a refurbishment option for project development. And there are also within the joint venture substantial other infrastructure items, including haul roads, an airstrip, a ball field and a mine camp, and all of these things will help charter shorter and lower cost path to development. So we intend to work closely with Panama Gold, and with whom we obviously share a common major shareholder, to position for a development decision within twelve to eighteen months.

As part of this transaction, we will also pick up a further 3,600 square kilometers of exploration tenements in the region, owned outright by Northern Star. And that will give Mount Gibson exposure to 5,700 square kilometers of ground in this area. And that’s obviously a sizable land package in a region which has been producing gold for a long time. So this transaction neatly complements our longer term pursuit of investment opportunities in a bid to become a multi commodity metals producer. We anticipate that further opportunistic investments ahead to add to our existing positions.

At present, the key positions comprise 9.8% plus options in Midwest iron ore producer, Fenix Resources, and that holding was worth approximately $21,000,000 at quarter end. Plus, we also have 5.4% of Queensland based copper producer, AIC Mines, which is worth approximately $11,000,000 at quarter end. In addition to those investments, Mt Gibson holds sub-five percent equity holdings with an average sorry, with an aggregate market value of $12,000,000 at quarter end, and that’s in a number of junior development companies where future financing and strategic options may arise. Regarding the share buyback program, it was, of course, necessarily paused while negotiations with Northern Star Advanced, and we’re now also in a blackout period ahead of the release of our full year results, which is scheduled for the August 20. We’ll reassess activity within the buyback program at that time.

To date, the company has bought back 38,800,000.0 shares or 3.2% of the issued share capital at a little over $0.31 per share. And finally, as we announced in April, we welcome Brett Smith as our new Chairman, who’s succeeding long standing Director, Lee Stingwe. So in summary, firstly, we’re focused on operating Cooland safely to maximize production and cash flow generation over its remaining life, in particular, as we use the current September to complete the last waste mining push and set the mine up for strong shipping and cash flow thereafter. And secondly, we’re obviously working to close the recently announced Central Tanami Gold Project acquisition and to work closely with our joint venture partner to promptly pursue activities necessary for a development decision. So we look forward to an exciting and somewhat different financial year ahead.

So with that, Lisa, I’ll now hand back to you for any questions that may be there.

Lisa, Moderator/Operator, Mt Gibson: Thanks, Peter. We don’t have any questions.

Peter, Executive (likely CEO/CFO), Mt Gibson: Okay. Thank you very much. We know that there are a number of people listening. So if you do have questions regarding either last week’s announcement or our quarterly, please feel free to contact us. And we trust everyone has a good day.

Thank

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