GWR Group (ASX:GWR) share price plunges 21% on iron ore update

GWR's shares continue to swim in a sea of red today. Here's a closer look.

| More on:
Upset man in hard hat puts hand over face after Armada Metals share price sinks

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 GWR Group Ltd (ASX: GWR) share price has plummeted 21% during early trade on Wednesday and now trades at 11 cents each.

GWR shares are trending down after the company announced a key update regarding the future of its mining operations.

Let's take a closer look.

What did GWR announce?

GWR advised that it had "shipped approximately 660,000 tonnes of ore since February 2021" upon completion of its September consignment.

However, it also added it had "halted mining operations at the C4 Iron Ore Mine for 30 days" whilst it "monitors" volatility in iron ore markets.

The decision was made due to a rapid downturn in iron ore prices since July.

For reference, the spot price of iron ore has come off a record high of US$230/tonne in May.

It settled around US$226/tonne from June to July and now trades at US$104.50/tonne. That's a 54% decrease in a matter of weeks.

Given GWR's position as an ASX resource share that produces commodities – in this case, iron ore – it is considered a price taker. As such, its share price fluctuates alongside volatility in the broader commodity markets.

This fact appears to be weighing in on GWR Group's share price as investors sell off shares in the metals' exploration and mining company to avoid "catching the falling knife" if iron ore continues to plummet.

GWR also holds a "significant inventory of mined iron ore stockpiles". As such, it is "considering its position in regard to recommencing operations" and "may resume mining or pivot its focus as required".

What did management say?

Commenting on the announcement, GWR's chairperson Gary Lyons said:

Whilst it is disappointing that mining operations have temporarily ceased at the C4 Iron Ore Mine, it is important to note GWR remains in a strong positon to resume operations as the mine will be left in a production ready state in order to take advantage of a recovery in iron ore prices.

Lyons added:

GWR is currently engaged with other iron ore producers who have expressed interest in accessing via minegate sale the mined high grade ore in order to blend it with their product.

GWR Resources share price snapshot

The GWR Resources share price has struggled this year and has posted a loss of 74% this year to date. This extends its loss over the past 12 months to 41%.

Its price now sits well off its single-year high of 45 cents. Indeed, today sets a new 52-week low for the mining exploration company.

Both of GWR's results are well behind the benchmark S&P/ASX 200 Index (ASX: XJO)'s return of around 25% over the past year.

The author Zach Bristow has no positions 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 52-Week Lows

A man holds his head in his hands, despairing at the bad result he's reading on his computer.
Materials Shares

Core Lithium share price hits a multi-year low: Will the tide change soon?

Are analysts now seeing value emerge from the lithium miner's shares?

Read more »

Red arrow going down on a stock market table which symbolises a falling share price.
52-Week Lows

2 ASX shares to buy that are at 52-week lows

Goldman Sachs thinks these beaten down shares are buys.

Read more »

A group of six young people doing the limbo on a beach, indicating oversold shares that can not go any lower.
52-Week Lows

Core Lithium share price dives another 12%. How low can it go?

Core Lithium has been playing a game of limbo with investors in 2024...

Read more »

Man on a laptop thinking.
52-Week Lows

2 ASX shares to buy that are near 52-week lows

Analysts think these beaten-down shares could be top buys.

Read more »

A man sitting at a computer is blown away by what he's seeing on the screen, hair and tie whooshing back as he screams argh in panic.
52-Week Lows

3 ASX 300 shares hitting new 52-week lows: Are they cheap buys?

What's sending these shares down to new lows today?

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Materials Shares

Why did this ASX All Ords stock just crash 24%?

What is weighing down this lithium stock today? Let's find out.

Read more »

A businesswoman gets angry, shaking her fist at her computer.
52-Week Lows

3 ASX shares at 52-week lows or worse

Times have been hard for owners of these shares.

Read more »

Blue chips with stock written on them.
52-Week Lows

These 3 ASX blue-chip shares just hit multi-year lows. Am I buying?

Here's what I'd do with these battered blue-chip shares...

Read more »