Total ore mined for the quarter came in at 1.9 million tonnes, while the total waste mined rose 22% to 9Mt.

Ore sales levelled at 1.8Mt, with slightly lower direct shipping sales and no low grade shipments over the period.

The low iron ore price weighed on the company, with the average free-on-board price coming in at $US65 a tonne ($A74/t), down from $83 in June.

“While conditions remain challenging, Koolan Island productivity and mining costs continue to improve at a rapid rate, giving us great confidence that our investment in new fleet and waste stripping over the next couple of years will position Koolan Island to become one of Australia’s lowest cash cost operations thereafter,” Mount Gibson CEO Jim Beyer said.

“Meanwhile, Extension Hill continues to generate steady production and positive cash flow.

Beyer said the company’s strong balance sheet, high-grade reserves and continued improvement left it well placed to navigate weaker conditions.

The company finished the quarter with $A465 million in cash and term deposits, with September sales revenue of $117 million.

Replacement mining equipment is expected to bring further productivity gains at Koolan Island, which registered cash costs near the bottom of its $7-9/t guidance for the quarter.

As previously flagged, the ramp-up at Koolan Island requires an initial investment in waste stripping over the next two years.

Elsewhere in the operations, the Extension Hill continued to lift mining activity, while Tallering Peak was closed following the depletion of reserves.

Mount Gibson said sales were on track to meet full year guidance of 6.6-7Mt.

In other updates, the company said it had received final approvals for drilling at the Iron Hill prospect at Extension Hill South.

Moving forward, it will also be re-assessing the carrying values of assets for the half-year financials.

Mount Gibson shares were last trading steady at 44.5c.