Iron ore prices have pulled back from US$130/t to circa US$120/t but Macquarie reassures the fundamentals for the commodity remain robust. Moreover, Australian shipments remain strong at around/above their guidance ranges while Vale shipments appear to lag.
Mt Gibson is transitioning from drawing on lower grade stockpiles to higher grade Iron Hill ore but the transition has affected lower sales in the June Q, with shipment delays also impacting. Low grade price discounting is continuing to have a significant impact, the broker notes.
The company has terminated a second offtake agreement for Iron Hill but still expects to be able to sell into the spot market. The termination is based on a failure to comply with a fundamental part of the agreement on behalf of the purchaser.