Mount Gibson Iron (ASX:MGX) is planning to conduct an on-market share buy-back of up to 5% of its issued shares as part of its capital management strategy, which will cost $20 million at the last closing share price of $0.33 per share.
Taking into account the current iron ore market conditions and outlook, alongside Mount Gibson’s anticipated future operational performance, the board has approved the share buy-back to begin in mid-September 2024 and be conducted over a 12-month period, unless completed or terminated earlier.
Mount Gibson, which has a market capitalisation of $402 million, says the extent to which it buys back shares, the timing of any buy-back purchases, and the price at which shares are bought back, are each subject to several factors, including market conditions.
CEO Peter Kerr says the board approving to start the on-market share buy back, reflects the confidence in the company’s outlook as it seeks to maximise cash flow from the remaining two to three year life of the Koolan Island operation.
“This underlying value is not presently reflected in the company’s share price, making a buy-back an effective value-accretive capital management initiative,” Kerr says.
As of 30 June 2024, the company had cash and investments totalling $442.3 million, excluding its interest in Fenix Resources (ASX:FEX).
The company says it does not expect to be in the market at all times during the potential buy-back period. Any buy-back will occur at Mount Gibson’s discretion.
Under the buy-back program, there can be no certainty that Mount Gibson will buy-back all of the 5% of issued shares available.
Mount Gibson Iron is a Western Australian producer of high-quality direct-ship iron ore products. The company has assets in the Kimberley and Midwest regions of Western Australia.
Write to Aaliyah Rogan at Mining.com.au
Images: Mount Gibson Iron
