GWR Group (GWR.AX) has confirmed it has shipped two cargoes totalling 115,000 wet metric tonnes of iron ore in October and December, and has now negotiated the sale of an additional 145,000 tonnes of iron ore to be shipped in the first quarter of the current calendar year.
In January, GWR has committed to ship 30,000 tonnes at US$100/t while an additional 60,000 tonnes will be shipped in February at a price of US$95/t for fines and US$100/t for lump product. In March, an additional 55,000 tonnes will be shipped at a price of US$110/t for the lump product. All prices are on a FOB basis.
The company anticipates the C4 pit can handle the volumes that will have to be delivered in the first quarter of this year as the expected strip ratio will be less than 1. The revenue from these shipments will help GWR to work on advancing Stage 2 which will require a cutback of the existing pit. This shouldn’t be too expensive considering the majority of the blasting operations already occurred in September. Once the Stage 2 cutback has been completed an additional 2 million tonnes of high grade iron ore could rather easily be mined and shipped to customers.
The iron ore prices are high (the benchmark price for 62% Fe content is now almost US$140/t again), but unfortunately GWR’s production costs were also high, so we will have to keep an eye on the profitability of the company as well.
Disclosure: The author has no position in GWR. Please read our disclaimer.
