How MGX Resources Is Rebuilding After a $60M Koolan Island Rockfall Setback
MGX Resources reported a $20.8 million half-year loss, driven by a major rockfall at Koolan Island that halted mining and triggered a $60 million asset impairment. The company is pivoting towards gold with its recent acquisition of a 50% stake in the Central Tanami Project.
- Half-year net loss narrows to $20.8 million from $71.7 million prior year
- Koolan Island rockfall causes suspension of mining and $60.3 million impairment
- Sales revenue down 8% to $156 million with shift to low-grade ore sales
- Strong cash reserves of $456 million maintained despite operational challenges
- Completed $50 million acquisition of 50% interest in Central Tanami gold project
Half-Year Financial Overview
MGX Resources Limited has released its half-year financial results for the period ending 31 December 2025, reporting a net loss after tax of $20.8 million. This represents a significant improvement compared to the $71.7 million loss recorded in the same period last year. The improved bottom line, however, masks operational challenges that have reshaped the company's near-term outlook.
The company’s revenue from ordinary activities declined by 8% to $156 million, reflecting lower sales volumes and a shift in product mix following a major incident at its flagship Koolan Island mine.
Impact of Koolan Island Rockfall
In mid-October 2025, a substantial rockfall at Koolan Island’s Main Pit forced MGX to suspend mining operations. The incident, while fortunately causing no injuries due to effective monitoring systems, has had a profound operational and financial impact. Mining activities were halted due to safety concerns over pit stability, leading to a strategic pivot towards monetising existing low-grade stockpiles and accelerating site rehabilitation efforts.
This disruption triggered a $60.3 million impairment charge against the carrying value of Koolan Island’s assets, including deferred stripping costs, mine properties, and plant and equipment. The impairment reflects the revised mine plan and reduced ore grades available for sale.
Consequently, MGX experienced workforce reductions, with approximately 140 employees and 130 contractors made redundant as part of the operational ramp-down. Despite these setbacks, the mine generated a positive cash flow of $10.4 million during the half-year, albeit down from $19.4 million in the prior period.
Operational and Market Performance
Sales volumes increased slightly by 6% to 1.35 million wet metric tonnes, but the average iron ore grade sold dropped significantly due to the shift to low-grade material post-rockfall. High-grade fines averaged 63.7% iron content, while low-grade sales averaged 49.6% Fe. Realised prices for high-grade fines were around US$89 per dry metric tonne FOB, compared to US$84 in the prior corresponding period, while low-grade material fetched about US$42 per dry metric tonne FOB.
Iron ore prices remained relatively stable during the half-year, with the Platts 62% Fe index averaging US$104 per dry metric tonne. The Australian dollar held steady against the US dollar, providing some currency stability for MGX’s export revenues.
Strong Financial Position and Treasury Management
MGX maintained robust liquidity with cash and investment reserves totaling $456 million at period end, down slightly from $462 million mid-year. The company holds a diversified portfolio of financial assets, including a 9.7% stake in Fenix Resources Limited valued at $37.8 million and a 4.9% stake in AIC Mines Limited worth $23 million. MGX remains debt-free, with no bank borrowings reported.
The company continues to employ hedging strategies to manage foreign exchange and commodity price risks, including foreign exchange collar options covering US$18 million and commodity forward sales contracts for iron ore.
Strategic Pivot: Central Tanami Gold Project Acquisition
Post-period, MGX completed a $50 million acquisition of a 50% interest in the Central Tanami Project Joint Venture (CTPJV) from Northern Star Resources Limited. This move marks a strategic diversification into gold mining, leveraging MGX’s operational expertise and financial capacity.
The CTPJV covers over 2,100 square kilometres in the Northern Territory and includes significant gold resources estimated at 2.8 million ounces. The project features a non-operating carbon-in-leach processing plant and associated infrastructure, offering potential for near-term development. MGX aims to fast-track permitting and technical studies to reach a development decision within 12 to 18 months.
This acquisition complements MGX’s existing mineral portfolio and aligns with its objective to build a multi-commodity metals producer in Australia.
Outlook and Market Guidance
Following the rockfall, MGX withdrew its FY26 sales guidance but targets selling approximately 1.0 million wet metric tonnes of low-grade material in the June 2026 half-year. The company plans to safely complete the low-grade sales programme and rehabilitation works at Koolan Island while advancing development activities at Central Tanami.
MGX’s board remains focused on cost reductions, sustainable productivity improvements, and prudent treasury management to support growth initiatives. The company continues to explore additional resource acquisition opportunities to enhance its commodity exposure and long-term profitability.
Bottom Line?
MGX’s resilience amid operational setbacks and strategic gold entry sets the stage for a transformative 2026.
Questions in the middle?
- What is the timeline and feasibility for resuming mining at Koolan Island’s Main Pit?
- How will the insurance claim related to the rockfall impact MGX’s financials?
- What are the key milestones and capital requirements for advancing the Central Tanami gold project?
