MGX reports A$30.2 million loss and A$412.1 million reserves

A costly final year at Koolan Island

MGX Resources Limited (ASX:MGX) is closing one mining chapter while spending to open another. The former Mount Gibson Iron reported a $30.2 million net loss for FY2026 after recognising $58.9 million in non-cash impairments, largely reflecting the October 2025 rockfall that ended mining at Koolan Island’s Main Pit.

The result was less severe than the $82.2 million loss recorded in FY2025, but the operating shift was stark. Iron ore revenue fell to A$204.0 million from A$330.5 million, with 2.68 million wet metric tonnes sold, including 1.81 million tonnes of low-grade stockpiled material at an average 44.7% iron grade. Koolan Island generated only A$1.0 million of operating cash flow after A$26.6 million of rehabilitation expenditure.

The annual report’s first Central Tanami resource statement gave MGX an attributable 1.4 million ounces of contained gold, following the acquisition that was covered in the Central Tanami resource statement. The total project resource is 2.8 million ounces at 2.8 grams per tonne, although the project remains undeveloped and its 1.2 million tonnes per annum processing plant is non-operating.

Koolan sale still depends on conditions

MGX has agreed to sell the Koolan Island operation to Crestlink Koolan for at least A$20.2 million in staged payments over seven years, plus a potential revenue share of up to A$5 million indexed to inflation. Crestlink is also expected to assume roughly A$30 million of remaining rehabilitation obligations, mainly tied to infrastructure retained on the island.

That transaction is not yet complete. It remains subject to conditions including Foreign Investment Review Board approval, any required Australian Competition and Consumer Commission clearance, and completion of specified rehabilitation work. Settlement is targeted for late 2026, although Crestlink can extend the timing to 31 March 2027 if key approvals are not satisfied by 8 December 2026. MGX retains responsibility for a separate insurance claim arising from the rockfall; the company said one insurer has reached a confidential settlement, while the potential outcome of discussions with the remaining insurers remains uncertain.

Groundrush becomes the main capital test

At Central Tanami, the joint venture has selected Macmahon Underground to construct a roughly 3.5-kilometre exploration decline at Groundrush for approximately A$38 million. The work is designed to support underground infill drilling and early underground development, with the aim of converting more than 400,000 ounces of Inferred Resources to the Indicated category for mine planning. The contract was subsequently finalised in August, after the period covered by the report, and construction is scheduled to run for about 14 months.

The project program also includes resource definition drilling at Jims, metallurgical testwork, processing plant studies, camp and utilities upgrades, airstrip improvements and permitting. The Groundrush and Jims deposits are the initial development focus, but the annual report provides no production guidance or final investment decision. MGX’s stated objective is to accelerate a potential development decision within 12 to 18 months, leaving the company exposed to the usual gap between a sizeable resource and a financeable mine.

The Groundrush work was previously reported as a $38 million decline contract, while the broader Koolan divestment was outlined in the Koolan Island sale agreement. Those milestones now sit alongside a balance sheet that gives MGX room to advance the project: cash and investments totalled A$412.1 million at 30 June 2026, down from A$484.6 million a year earlier, with the decline mainly reflecting the Central Tanami acquisition and related costs.

Execution replaces production as the key measure

MGX ended the year debt-free in banking terms, but its financial profile is changing from iron ore sales and interest income to development spending, exploration risk and asset-transfer execution. Group operating cash flow was negative A$20.6 million, while the company carried A$40.7 million in rehabilitation provisions and a further A$12.4 million drawn under performance bonding facilities.

The immediate test is whether MGX can complete Koolan’s rehabilitation and secure the Crestlink settlement without derailing Central Tanami activity. Beyond that, the more consequential question is whether Groundrush drilling and engineering work can turn the project’s resource base into a credible development case before the company’s reserves are asked to carry a much larger capital burden.