MGX Resources has completed a significant strategic transition, using its iron ore cash reserves to fund entry into the Central Tanami Gold Project while simultaneously stepping back from its troubled Koolan Island operation. The company paid $50 million for a 50 percent stake in the Central Tanami Project Joint Venture in February 2026, marking a deliberate pivot toward precious metals development. This represents a fundamental repositioning of the business rather than an incremental adjustment, with the company now focused on advancing a high-grade gold project in Australia’s Northern Territory.
The financial results reflect both the execution of this transition and the challenges faced during it. Iron ore sales generated $204 million in revenue from 2.68 million wet metric tonnes, down significantly from $330.5 million in the prior year despite similar tonnage sold, revealing the pressure on commodity prices afflicting the sector. More concerning was the $58.9 million non-cash impairment of Koolan Island’s carrying values following a Main Pit rockfall incident in October 2025. This asset write-down drove the reported net loss of $30.2 million after tax, even as underlying earnings showed improvement with profit before tax and impairments reaching $29.1 million, up from $20.2 million the prior year.
The binding agreement to divest Koolan Island to Crestlink removes a source of operational friction and ongoing capital demands. The deal provides $20.2 million in upfront and deferred cash payments plus up to $5 million in future revenue sharing, while transferring rehabilitation obligations estimated at $30 million to the buyer. Completing this exit in late 2026 or early 2027 will free MGX to focus entirely on the gold project without the distraction of a legacy, problem-prone iron ore asset.
Balance sheet strength remains intact despite the strategic overhaul. Cash and investments stood at $412.1 million as of 30 June 2026, down from $484.6 million, but the company remains debt-free with no competing capital demands. This financial flexibility is essential given the capital-intensive nature of gold project development and positions the company to fund Central Tanami advancement without diluting shareholders. The company is already ramping activity at the project, including resource definition drilling at the Jims deposit, infrastructure upgrades, and preparation for exploration decline work commencing in the September quarter.
Investors should monitor the pace of Central Tanami development and the outcome of the Koolan divestment. The success of this business transformation hinges on MGX’s ability to convert its gold asset into a credible development-stage project that justifies the capital deployed and aligns with market sentiment toward gold exploration upside. This announcement is price sensitive and has been flagged as material by the ASX.
View the full ASX announcement (PDF)
About MGX Resources Limited (ASX: MGX)
MGX Resources Limited is an Australian mining company that primarily operates the Koolan Island hematite iron ore mine in Western Australia’s Kimberley region, with over 40 million tonnes of export history. The company is diversifying into precious and base metals exploration, including a 50% stake in the Central Tanami Gold Project in the Northern Territory, while maintaining exploration activities across Western Australia’s Mid-West and Gascoyne regions.
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