The 62% iron ore fines price fell to an all-time index low of $US38.52 per tonne overnight, leading the BC board to decide that continuing operations were not in the best interests of the company.
The mine, a 75:25 joint venture between BC and Fortescue Metals Group, reported September quarter all-in cash costs of $A52 per wet metric tonne.
The operation was slated to produce 4.9-5.3 million tonnes this financial year at all-in costs of $48-54/wmt free on board.
The suspension of direct shipping ore operations will occur progressively, with exports expected to wind up next month.
Iron ore operations can be easily restarted if the JV decides market conditions warrant it.
“Whilst this has been a difficult decision for the board, we have consistently advised that our primary focus at BC Iron is to create value for shareholders,” BC managing director Morgan Ball said.
“BC Iron is a price-taker and unfortunately, despite the commitment and achievements of all BC Iron staff and contractors to successfully reduce our cost base, the iron ore market is such that we have had to make this decision.”
There is around 11 million tonnes of low-grade ore stockpiled at Nullagine and in a trial, the JV will sell an unprocessed parcel of ore to FMG’s Christmas Creek mine under a mine gate sale arrangement.
If successful, Nullagine could continue to run at a reduced rate.
The mine employs 30 BC workers and 200 contractors, but job losses will be dependent on the results of the trial.
BC said its December 31 cash balance was likely to be $42-27 million, down from $71.8 million at the end of September due to the impact of lower prices, reduced shipments, payment of creditors and a debt repayment.
The company will have debt of $US1.5 million and a staged royalty repayment obligation of $A9 million relating to the Western Australian government’s royalty rebate scheme.
Further suspension costs will be incurred next year.
“Importantly, in making the temporary suspension decision now, BC Iron will have options going forward,” Ball said.
“With no material debt on the balance sheet and ongoing cashflow from our Iron Valley operation, we will assess the potential to run a low-grade operation at the Nullagine JV and continue to appropriately progress the potential for the Buckland/Cape Preston East port project in the west Pilbara.”
BC shares emerged from a trading halt and slumped 23% to 14.5c, an all-time low.