The news of the provisional deal with the native title group comes just a week after the junior iron ore miner revealed it would axe some 190 jobs from its Koolan Island and Tallering Peak operations, with 150 jobs to go from Koolan Island alone.
The company also revised down its iron ore shipment forecast for the 2008-09 financial year from 7.2 million tonnes to 5Mt.
The iron ore prices Mount Gibson will receive for the financial year will also be at a discount to benchmark prices after the company was asked to delay shipments to Chinese customers.
The weakening iron market and customer problems sent Mount Gibson’s share price plummeting from around $1.24 on October 8 – the day before it announced the delays demanded by its Chinese customers – to its current price of 32c, its lowest level since January 2005.
The company's stocks reached a high of $3.78 in March this year.
Mount Gibson is also issuing $162 million worth of new shares to help its near-term cashflow issues.
Existing major shareholders and offtake partners APAC Resources and Shougang Concord International have agreed to underwrite a one-for-five renounceable rights issue to raise $96.5 million, while Shougang Concord has agreed to subscribe for a placement to raise a further $66 million.
The company has also slowed development work. At Koolan Island, main pit development work will be suspended and this will defer the start of ore mining for a minimum of six months.
At the time, Mount Gibson said sufficient ore was available from satellite deposits at Koolan Island to continue saleable product during the delay.
The company hopes to restart development work at Koolan Island in July next year.
Despite the delays Mount Gibson today said the prospectivity of western iron ore targets on Koolan Island was extensive and could boost the company’s future production profile.
Managing director Luke Tonkin said if the company can define quality, near-surface hematite iron ore, this ore could be blended with its existing satellite ore sources.
This could improve Mount Gibson’s medium-term operational outlook, he added.
Koolan Island is already a very high grade area and the now-delayed main pit was expected to provide direct shipping ore hematite grading between 67-68%.
Mount Gibson said today once it entered a Heritage Protection and Exploration Agreement with the Dambimangari, it should take around 4-6 months to work through the necessary statutory and regulatory approvals to begin exploration work on the island.
