Venture Minerals (ASX:VMS) share price crashes 33% on project update

It has been a day to forget for Venture Minerals shareholders…

| More on:
asx share price fall represented by red downward arrow

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Venture Minerals Limited (ASX: VMS) share price is deep in the red in early afternoon on Friday. This comes after the mineral exploration company provided an update in regards to the Riley Iron Ore Mine in Tasmania.

At the time of writing, Venture Minerals shares are down a massive 33.77% to 5.1 cents. This means that its shares are now trading at a 6-month low.

What did Venture Minerals announce?

According to its release, Venture Minerals advised it has completed its first ever commercial shipment of iron ore from its Riley Iron Ore Mine.

The shipment comprised 45,632 tonnes of iron ore with an average grade of 57.3% Fe. A discharge port in China as designated by the company's off-take partner, Prosperity Steel will receive the shipment. It's expected that Venture Minerals will collect around $5.1 million in the next fortnight under its offtake agreement.

While this is good news, the company provided a concerning operational update, which has caused its shares to fall.

As such, Venture Minerals stated that 62% of Fe iron ore prices have declined significantly in the past few months. Once reaching highs of US$230 per tonne, the current market rate is hovering just above US$100 per tonne.

Furthermore, the company's 57% Fe grade ore has been heavily discounted to a market rate of 30%. This is a stark contrast to when its iron ore was trading at just a 10% market rate discount.

Venture Minerals' woes have been amplified with the volatile shipping market caused by congestion at Chinese ports, COVID-19, and political impacts. The shipping rates for iron ore have tripled since 2019 from US$18 per tonne to the current rate of US$54 per tonne.

In response to the above conditions, the company is conducting a full review of its Riley Iron Ore Mine operations. Management hopes to identify cost efficiency measures to offset some of the external market volatility.

While some of the external pressures are expected to be temporary, Venture Minerals has decided to suspend mining operations. It aims to preserve existing capital while it works through its review and assesses the situation.

About the Venture Minerals share price

Over the past 12 months, Venture Minerals has gained almost 50% despite today's significant drop. However, when looking at year-to-date, its shares are down around 7% for the period.

Venture Minerals presides a market capitalisation of roughly $68 million and has 1.3 billion shares on issue.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A happy young couple lie on a wooden deck using a skateboard for a pillow.
Share Gainers

These were the best-performing ASX 200 shares in March

These shares made their shareholders smile in March thanks to some very big gains.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Opinions

2 ASX shares I have been buying in 2024!

I’m a believer in the long-term outlook of these stocks.

Read more »

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »