Iron ore producer Mount Gibson is struggling to make money and weighing up mine closures as the iron ore price trades around decade lows.
Chief executive Jim Beyer said the West Australian miner had increased its iron ore sales and lifted cash reserves by $15 million to $345 million in a difficult environment during the December quarter.
But he conceded the company was now struggling to generate cash after freight costs and currency movements were taken into consideration.
"I think it's very marginal," Mr Beyer told analysts on a conference call on Wednesday.
"We continue at Koolan Island to get some benefits of the mining that was done back in the September quarter but there's no doubt it's a pretty challenging period for us at the moment."
The price of iron ore lifted 20 US cents to $US42.10 overnight but it is down significantly from around $US65 a tonne this time in 2015.
"There's just a negative outlook on anything that's got iron in its name or associated with iron," he said.
Mr Beyer said extreme market volatility demanded the company continue to act prudently to protect its business and preserve value for shareholders.
Mount Gibson's all-in December quarter cash costs averaged $47 per wmt compared with $52 per wmt in the preceding quarter.
The company is continuing to review its activities in the context of prevailing market conditions amid a weak outlook for iron ore prices.
"This analysis must take into account not just the market outlook and operating margin, but also the fixed infrastructure and transport obligations that would become payable in the event of an early closure at Extension Hill," he said.
The company will monitor the viability of its depleting Extension Hill operations as it looks ahead to the planned development of its Iron Hill deposit.
Mr Beyer estimates it would cost around $30 million to close Koolan Island in the Kimberley and around $8 million to close Extension Hill in the mid-west.
Still, he says the company has the financial capacity to acquire undervalued non-iron ore assets.
"... We continue to evaluate potential new resource acquisition opportunities outside of iron ore," Mr Beyer said.
Mount Gibson has recently cut staff and implemented new rosters to reduce costs.
December quarter iron ore sales rose to 1.5 million wet metric tonnes (Mwmt) from 1.2Mwmt a year ago, while revenues lifted to $76 million from $72 million.
However, for the first half, sales fell to 2.6Mwmt from 3.1Mwmt.
The company is due to report its half year financial results next month.
Mount Gibson shares dropped one cent, or 5.4 per cent, to 17.5 cents.
