Murchison Metals Reports Drop in Annual Profit

Submitted by Jim Thesiger on 21 September, 2009 - 17:29

Murchison Metals (MMX), a company that operates in the mineral exploration and mining industry with core concentration on iron exploration in Western Australia has reported sharp fall in its yearly profit despite a higher level of output. The result is seen as the reflection of a market that is declining for the bulk of commodity after the Chinese steel makers reduced their production. Murchison reported a net profit of $732,000 for 12 months to June 30 which is lower than the net profit of the earlier year ($55.6 million). However, the company mined 1.65 million tonnes of ore for the year 2008/09 which was higher than the output for the year 2007/08 where the production was 1.61 million tonnes. 1.47 million tonnes of ore was shipped, up from prior 1.34 million tonnes.

Despite the iron ore market remaining soft, Murchison claimed that the company has managed to maintain regular shipments to the customers for 50 percent of its joint venture with Mitsubishi Corporation of Japan. Most Australian producers and the spot price of iron ore was affected by the deferrals of shipment and cancellations, Murchison authority added. However, Crosslands managed to maintain shipments at a regular basis throughout the year due to the strong relationship with the customers which was developed over the preliminary years of the operation in Jack Hills which is located in Western Australia. The high quality ore of Jack Hills was also a key reason. At the ending period of the financial year, improvements were sited in the Chinese Steel market.

The company mentioned that the outcome included a $25.9 million profit which was generated from the sale of its 9.2 percent stake in Midwest Corporation- an iron ore miner that is controlled by Sinosteel Corporation. It was accounted for $6.5 million to settle litigation with former Chameleon Mining NL directors as well and in addition $4.7 million in other expenses regarding consultants and legal issues.