Iron Ore

Hawsons Iron shares dumped to oblivion as high inflation crimps key studies

Mon 17 Oct 22, 11:47am (AEST)
drowning in ocean with hand up for help
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Key Points

  • Hawsons operates the high-grade Hawsons Iron Project in WA
  • The company will delay its upcoming Bankable Feasibility Study to assess 'escalating global costs and deteriorating economic conditions'
  • The study was expected to boost production to 20 million tonnes per annum and progress the project closer to production

Hawsons Iron (ASX: HIO) shares more than halved on Monday after the company said it will slow the pace of its upcoming Bankable Feasibility Study to examine 'escalating capital expenditure costs'.

The Hawsons Iron Project in WA boasts magnetite grades of 70%, well-above 57-63% grades from heavyweights BHP (ASX: BHP) and Rio Tinto (ASX: RIO). The Bankable Feasibility Study (BFS) was the next key development in progressing the project towards production and hoped to expand the project's annual production from 10m tonnes to 20m tonnes.

Hawsons was previously targeting first production in the second-half of 2024.

A dire slowdown

“We, like many companies, are being challenged by the current economic climate, falling Australian dollar, supply chain cost escalations and restricted access to equity markets which are beyond our control," said Chairman Dave Woodall.

“A project slow-down is the most sensible and prudent response to preserve capital, given global cost pressures and will allow a focus on optimising pathways in the best interests of shareholders," he added.

Hawsons said the BFS will not be completed by the original completion date of December 2022. Instead, the company will conduct a strategic review of all options to progress the project.

Woodall also said the company's capacity to raise additional capital over the next 12 months will be contingent on the passing of a resolution at the upcoming AGM on 15 November.

Shares dumped to oblivion

The otherwise large scale and high grade project now faces significant uncertainty about when it'll progress towards construction.

Hawsons shares fell -46% as the market opened but selling only gathered momentum, now down -59.5% at the time of writing. The stock is trading at levels not seen since December 2021.

Volumes are unprecedented, with 34.8m shares traded at 11:35 am AEDT compared to the stock's 20-day average of just 3.6m.

Hawsons Iron Ltd (ASX HIO) Share Price - Market Index
Hawson share price chart


Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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