What’s Next for Mount Gibson Iron After a 30% Slide

Is This the End or the Start of a Reset?

Mount Gibson Iron (ASX: MGX) shares fell 30% today after the company announced an indefinite suspension of mining at its high-grade Koolan Island iron ore operation, reversing investor confidence in the mine’s near-term outlook. The decision follows a 16 October rockfall on the Main Pit footwall, which independent geotechnical experts deemed unsafe and uneconomic to remediate, particularly given the site’s remaining mine life of around 11 months.

While mining has ceased, processing of existing stockpiles will continue for the next three to four months, allowing Mount Gibson to complete near-term shipments and bring forward site rehabilitation.

Following the suspension, the company withdrew its FY26 production guidance of 3.0–3.3 million wet metric tonnes, prompting a sharp market reaction. The selloff reflects the loss of a key revenue driver in FY25, Koolan Island accounted for roughly 70% of total shipments, or 5.3 million tonnes, underscoring just how central the project has been to Mount Gibson’s earnings profile.

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Mount Gibson Iron Holds Its Ground with A$473M Cash and Zero Debt

It’s not all downhill from here. Despite the setback at Koolan Island, Mount Gibson Iron remains in a strong financial position, holding A$473 million in cash and investments and carrying no debt as of 30 September 2025. This balance sheet strength gives the company valuable flexibility as it navigates the transition away from its core iron ore asset.

Koolan Island Suspension Wipes A$250M in Value, Exposing Mount Gibson’s Single-Asset Risk

Koolan Island has been a cornerstone of Mount Gibson Iron’s earnings since its restart in 2018, generating more than A$400 million in revenue during FY25. Its low production costs of around US$40–50 per tonne made it one of the company’s most profitable assets. However, the suspension will come with A$30–40 million in transition costs, primarily tied to redundancies affecting about 450 workers, while approximately 75 employees will remain to oversee rehabilitation and limited operations. This expense equates to roughly 8% of Mount Gibson’s cash reserves.

The market reacted swiftly, with the share price falling 28%, wiping out about A$250 million in market value. The decline is consistent with reactions seen across the mining sector following similar operational setbacks. What stands out to me is how the market’s response reflects the company’s heavy reliance on Koolan Island for earnings, while its Midwest operations are still in early development. This event underscores the importance of diversification and project maturity in maintaining investor confidence through commodity cycles.