Murchison's ore shipments fall, costs rise

By David Fickling From: Dow Jones Newswires

January 27, 2011 12:53PM

IRON ore shipped by Murchison Metals fell by more than a third on the year in the three months to December 31, while production costs rose and production shifted toward lower-value varieties of the commodity.
Murchison said in a second-quarter activities report that ore shipments fell 35.6 per cent, from 499,328 tonnes in the second quarter of the company's 2009-10 financial year to 368,041 tonnes in the same period this year.

The results narrow the margin of error for Murchison as it pushes ahead with its Oakajee Port & Rail project, an ambitious joint venture with Mitsubishi to build a new port capable of exporting 45 million tonnes a year of iron ore from Western Australia's Midwest region, a relatively undeveloped iron ore province to the south of the Pilbara.

Start of sidebar. Skip to end of sidebar.End of sidebar. Return to start of sidebar.Net cash holdings dropped from $102.4 million at the end of December 2009 to $31.3m on the same date last year, with a $21.1m outflow of cash to pay for feasibility studies relating to Oakajee.
The company in November signed a 12-month deal with US investor Resource Capital Funds allowing it to draw on a $US100m finance facility at a rate of 10 per cent.
Shipments of higher-value lump ore were down 67 per cent to 120,479 tonnes, while the ore grade dropped from 65.1 per cent iron to 62.4 per cent. Shipping of lower-value fines rose 83.5 per cent to 247,562 tonnes while the grade also declined, from 63.6 per cent to 61.1 per cent.
Cash costs rose to $110 a tonne from $84 a tonne in the previous quarter, while the average selling price was $138 a tonne, Murchison said.