Shares in Mt Gibson Iron crumbled by more than 48% after it decided to mothball its Koolan Island iron ore mine in Western Australia.
Operations had been suspended following flooding but the company has now decided to put the mine on maintenance only.
Several hundred workers at the mine will be made redundant, costing about $11 million.
Mount Gibson anticipates there will be a substantial non-cash impairment when it reports its financial results for the six months to the end of December 2014.
The company will look at the mine’s future again in 2015 in the light of iron ore prices which this year have fallen from more than $100 a tonne to about $70 a tonne.
Its shares are trading at $0.21, about 48.7% down today.
For the 2014 financial year, the company reported net profit after tax of $96.4 million on sales of $898 million.