Mount Gibson’s new iron ore mine in Australia closer to final approval

Western Australian iron ore miner Mount Gibson (ASX:MGX) scored Monday a key win for its proposed Iron Hill mine after the state’s environmental agency (EPA) gave the project the green light.

The new mine, located just 3 km from the company’s existing Extension Hill operation, is expected to offset an imminent output drop as mining at Extension will cease by the end of this year, with last ore to be exported early in 2017.

Iron Hill would allow Mount Gibson to remain in business for another two to three years.

The EPA recommendation, which is subject to a number of conditions, will be open for public comment for two weeks. After that, it’ll be Environment Minister Albert Jacob’s job to determine whether the project can move forward.

With an the iron ore price of $56.9 per tonne as of this morning, according to The Metal Bulletin, capital investment into mining of the commodity has dropped dramatically in the past two years.

But as prices for the steel-making ingredient regain strength, especially in the past weeks, producers are becoming a tad more optimistic.

Earlier this month, UBS analysts said that most miners are beyond breaking even. In Mount Gibson’s case, they estimate the miner’s books are balanced at an iron price of $44 per tonne.

Iron Hill would allow Mount Gibson to remain in business for another two to three years.