Mount Gibson Iron (ASX:MGX) has received the approval for the proposed development of the Iron Hill iron ore mine from the Western Australian ministry for the environment.
Iron Hill will be a small and low-cost project, producing approximately 8.8 million tonnes of iron ore from inferred resources at an average grade of just over 58% Fe. The initial capex is estimated at A$2-3M as Iron Hill is located within walking distance from the depleted Extension Hill open pit. 70% of the expected production in the first year of the mine life has already been committed to offtake agreements. The remainder will be sold at spot prices on a cargo by cargo basis, which means as much Mount Gibson will try to sell that one million tonnes when it’s opportune to do so (i.e. during price spikes).
Mount Gibson currently has a market capitalization of A$395M, and a net cash position of in excess of A$400M after a recent insurance payment related to the Koolan Island issues.