Australian iron ore miner Mount Gibson say it is increasing its sales guidance for the financial year ending June 2017 to 3.2-3.5 million wet metric tons. This is still down sharply from the previous year but the company has reversed its losses thanks to higher prices, Kallanish notes.

In the six months to December 2016, Mt Gibson earned a net profit of AUD 22.9m ($17.6m), compared to a net loss of AUD 15.4m a year previously. Sales revenues fell however, by around -17.8% to AUD 102m, on the back of lower output. Revenues included AUD 8.2m from the discontinued Tallering Peak mine, of which the final sales of low-grade lump and fines are expected in the current quarter.

The Iron Hill extension, which recently received final regulatory approvals, is key to the company’s futures revenues. Mining at Extension Hill ended in November and the company is selling down stockpiled ore for the remainder of the year. It says it has 417,000wmt of crushed ore stockpiled at the Perenjori rail siding and another 248,000wmt at the mine site. There is also 3.4m wmt of uncrushed low grade ore stockpiles which can be utilised if a decent price can be secured, it adds.

Iron Hill is expected to begin sales in May and produce around 400,000-500,000wmt of ore by the end of June. For the first year of operations, Mt Gibson has offtake agreements for around 70% of output with China’s Sinogiant Steel Holdings Group, Xinyu Iron and Steel Group and Shougang-affiliate SCIT Trading. Around 5.5-6mt of iron ore is expected to be mined over the life of the project, which is due to end in late 2018. Estimated cash costs average AUD 46-48/wmt fob.

Mt Gibson’s Koolan Island operations remain out of action because a seawall collapsed, flooding the site, in 2014. The company says it expects to complete an evaluation this quarter into the possibility of rebuilding the seawall in order to resume production.