Ann: Operational and COVID19 Update, page-2

Operational and Coronavirus (COVID-19) Update
Mount Gibson Iron Limited (Mount Gibson or the Company) provides the following update on its mining
operations in Western Australia following recent government restrictions to combat the spread of the
COVID-19 coronavirus.
Coronavirus (COVID-19)
The wellbeing of employees, contractors and communities is Mount Gibson’s primary consideration. The
Company understands and supports the urgency of Government measures to stem the transmission of the
COVID-19 virus and protect vulnerable communities.
Mount Gibson has already implemented a range of protocols to prevent the spread of the virus, consistent
with prevailing advice from Western Australian (WA) and Federal health authorities. Mount Gibson’s iron
ore operations on Koolan Island in the Kimberley region, and at Extension Hill and the Geraldton Port in
the Mid-West region, have continued albeit with increasing travel and operating constraints.
The WA Government announced on 26 March 2020 that the Commonwealth Government had exercised its
powers under the Biosecurity Act 2015 to implement specific travel restrictions to the Kimberley region in
order to protect the wellbeing of residents and remote Aboriginal communities from the spread of the virus.
It is now prohibited for individuals to enter the Kimberley region unless they satisfy specific exceptions and
are involved in essential activities. Mount Gibson has confirmed with the relevant authorities that these
exceptions extend to those individuals connected to mining operations where prior approval is obtained
from the relevant Government biosecurity authority.
Consequently, Mount Gibson has worked closely with the WA Government and Police to obtain the relevant
biosecurity approval for its personnel to travel to Koolan Island. This ensures that the Koolan Island
operation can continue for the foreseeable future. Mount Gibson must adhere to strict travel protocols
designed to further reduce the risk of transmission to the regional communities. In addition, Mount Gibson
is continuing its existing “social distancing” travel and operating protocols and will also pursue further travel
and workforce roster changes.
The development decision made in the December quarter to construct a sealed airstrip on Koolan Island
capable of taking direct jet flights from Perth now forms part of Mount Gibson’s longer term COVID-19
management plan. Construction of the airstrip is proceeding well, with initial flights presently anticipated
for October this year. Opportunities to expedite this project are under consideration.
Operational Update
Mount Gibson is pleased to report that its customers have all continued to perform their obligations under
its various offtake agreements, for both its Koolan Island and Mid-West operations.
However, the travel restrictions and protocols that are now in place in Western Australia are anticipated to
cause some production disruptions and operating cost increases for Mount Gibson’s operations. New
restrictions on travel within WA come into effect on 1 April 2020 and additional interstate travel restrictions
are anticipated. Approximately 90% of Mount Gibson’s employee and contractor workforce resides in WA
and the Company is working with its personnel to respond to these changes.
As the Koolan Island mining operation enters its second year since the 2019 restart, the waste stripping
requirement increases and planned ore production levels vary from quarter to quarter, before the scheduled
waste stripping ratio significantly reduces from the third year onwards. Production at Koolan Island in the
March 2020 quarter has been lower than the previous quarter as it was also impacted by difficult mining
conditions arising from a number of cyclonic wet weather events in the period. Mining movement rates
have increased in March and are expected to improve further in the June 2020 quarter.
Given the current uncertain business environment and related operating challenges, it is presently difficult
to provide reliable sales and cost predictions for the medium term. Accordingly, Mount Gibson has decided
to withdraw its sales and cost guidance for the 2019/20 financial year.
With respect to the March 2020 quarter, Group ore sales are expected to total approximately 1.0 million
wet metric tonnes (Mwmt), comprising 0.6 Mwmt of low-grade material from the Mid-West and 0.4 Mwmt
of high grade fines ore from Koolan Island.
While Mount Gibson currently expects improved ore production and sales from Koolan Island in the June
2020 quarter, it is likely that Koolan Island’s sales for the 2019/20 financial year will be below the previous
annual guidance for the operation. Consequently, in conjunction with the additional costs expected as part
of the Company’s COVID-19 response, Koolan Island’s costs are anticipated to exceed the now-withdrawn
guidance.
In the Mid-West, sales of low-grade material are proceeding well with costs presently in line with plan. The
incoming regional travel restrictions are not at this stage anticipated to significantly impact the Mid-West
operations, however this will be further assessed as travel restrictions are clarified.
Mount Gibson will provide further updates as appropriate. The Company’s March Quarter Activities Report
is scheduled for release in mid-April.
Mount Gibson remains well placed to weather the current uncertainty given its strong balance sheet and
high-quality Koolan Island iron ore product.