Mount Gibson Iron has recorded a loss of $869.8m during first half ending 31 December 2014, compared to $78.3m profit in the same period a year earlier.

For the six months ended 31 December 2014, the earnings were hit by declining iron ore prices and flooding at the company’s Koolan Island mine.

The company attributed the loss to non-cash impairment charges of $946.3m.

Mount Gibson Iron CEO Jim Beyer said: "Nonetheless, the company has responded quickly and diligently to the changed circumstances by substantially reducing costs, preserving capital and restructuring its business according to our evolving requirements.

"This ongoing focus on preserving value will continue to deliver benefits in the months ahead."

The failure of the main pit seawall at the company’s Koolan Island mine in West Australia resulted in substantial non-cash impairments of $844m.

Flooding at the mine had an impact on production during the period and 3.1 million wet metric tons (wmt) of ore was sold at an average price of $61 per ton.

In December 2014, around 200 jobs were made redundant at Koolan Island operations with 20 roles at the company’s Perth corporate office.

Mount Gibson Iron plans to further reduce head count in the current half of the year.

The Extension Hill mine generated pre-tax operating cash flow of $15m during the December half with an average cash cost of $49 per wmt.

For the year ending June 2015, the company expects to sell an additional 0.2 million tons from Extension Hill.

Mount Gibson raised sales guidance range to 5.4 million tons for the 2015 financial year.