FY2016 Financial Results

MGX

Investor Presentation 17 August 2016

Disclaimer

This Document is Confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person, or published,

in whole or in part, for any purpose without prior written approval from Mount Gibson Iron Limited. This Document is not a Prospectus nor an Offer to Subscribe for Shares.

Mount Gibson Iron Limited and its subsidiaries (ASX:MGX, "MGX") makes no representations or warranty (express or implied) as to the accuracy, reliability or completeness of this document. MGX and its respective directors, employees, agents and consultants shall have no liability (including liability to any person by reason of negligence or negligent misstatement) for any statements, opinions, information or matters (expressed or implied) arising out of, or contained in or derived from, or for any omissions from this document, except liability under statute that cannot be excluded.

This document contains reference to certain forecasts, projections, intentions, expectations and plans of MGX, which may or may not be achieved. They are based on certain assumptions which may not be met or on which views may differ.

The performance and operations of MGX may be influenced by a number of factors, uncertainties and contingencies many of which are outside the control of MGX and its directors.

No representation or warranty (expressed or implied) is made by MGX or any of its respective directors, officers, employees, advisers or agents that any forecasts, projections, intentions, expectations or plans set out in this document will be achieved, either totally or partially, or that any particular rate of return will be achieved.

Investments in shares in MGX are considered highly speculative.

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FY2016

Overview

(All figures are expressed in Australian dollars unless stated otherwise)

  • Underlying $19.4 million gross profit1 comprising an underlying $13.4 million gross profit from continuing operations after administration and finance costs, and a profit of $6.0 million from the discontinued Tallering Peak operation.
  • Reported statutory net profit after tax of $86.3 million (FY2015: $911.4 million loss), including settlement of the property damage component of the Koolan Island insurance claim, and after non-cash net impairment charges of $15.4 million.

  • Full year sales revenue of $240 million (FY2015: $325 million) on iron ore sales of 5.0 million wet metric tonnes2 (Mwmt) (FY2015: 5.8 Mwmt).

  • Cash, term deposits and liquid investments of $400 million at 30 June 2016 (30-June-2015: $334 million), including $51 million in insurance settlement proceeds received by year end, with the balance received in July.
  • Total Cost of Goods Sold (COGS) of $44/wmt Free on Board (FOB) (FY2015: $62/wmt).
  • All-in cash cost3 of $46/wmt FOB for the year, in line with guidance (FY2015: $62/wmt).
  • Full year cashflow from operations of $5.7 million (FY2015: negative $91.1 million).
  • $86 million cash settlement agreed for the property damage component of the Koolan Island seawall insurance claim, independent of the business interruption component which is progressing.

  • FY2017 sales guidance of 2.8 to 3.1 Mwmt at an all-in cash cost3 of $48-52/wmt FOB.

  • Conditional EPA approval recommendation received for the Iron Hill Project, with final approvals targeted by end 2016 to allow production to start in early 2017.

  1. The underlying basis is an unaudited non-IFRS measure that in the opinion of the Directors provides useful information to assess the Company's financial performance.

  2. Inclusive of sales from the discontinued Tallering Peak operation.

  3. All-in cash costs are unaudited and reported FOB including all operating, capital, royalties and head office costs.

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FY2016 Profit

A solid performance in a challenging year

Group Summary Results

Year ended 30 June

2016

Year ended 30 June

2015

Ore tonnes sold1

M wmt

5.0

5.8

Average realised price, all products1 (FOB)

$/wmt

48.4

55.6

Consolidated sales revenue1

$m

240.5

324.6

Continuing Operations (Extension Hill & Koolan Island):

Sales revenue

$m

235.2

315.6

Interest income

$m

9.7

12.2

Cost of goods sold

$m

(213.7)

(341.7)

Impairment write-back/(loss) on ore inventories

$m

3.4

(3.4)

Gross profit/(loss) from continuing operations

$m

34.6

(17.3)

Administration and other expenses

$m

(19.4)

(32.4)

(2.9)

Finance costs

$m

(1.8)

Underlying gross profit/(loss)2 from continuing operations

$m

13.4

(52.6)

after administration and finance costs

Other income (including insurance settlement in 2015/16)

$m

91.8

7.9

Impairment3

$m

(25.7)

(944.7)

Profit/(loss) before tax from continuing operations

$m

79.5

(989.4)

Income tax benefit

$m

0.8

99.9

Profit/(loss) after tax from continuing operations

$m

80.3

(889.5)

Discontinued Operations (Tallering Peak):

5.3

Sales revenue

$m

9.0

Cost of goods sold

$m

(6.2)

(21.1)

Impairment write-back/(loss) on ore and consumables inventories

$m

6.8

(7.0)

Tax expense

$m

-

(2.8)

Profit/(loss) after tax from discontinued operations

$m

6.0

(21.9)

Net profit/(loss) after tax

$m

86.3

(911.4)

Totals may not add due to rounding.

  1. Shown inclusive of the discontinued Tallering Peak operations. Refer the attached financial statements for details.

  2. The underlying basis is an unaudited non-IFRS measure that in the opinion of the Directors provides useful information to assess the Company's financial performance.

  3. Impairment of mine properties, consumables, property/plant/equipment and deferred acquisition/exploration/evaluation costs.

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Mount Gibson Iron Limited published this content on 17 August 2016 and is solely responsible for the information contained herein.
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