Mount Gibson Iron Limited (ASX:MGX) will close its Koolan Island iron ore mine in WA after the main pit was flooded when a seawall collapsed.
The miner says the choice to repair and re-instate the mine will be considered in light of falling iron ore prices and exchange rates.
The evaluation process is at a preliminary stage and the operation has been placed on effective care and maintenance.
The company says workers will be laid off and impairment charges will likely be included in financial reports.
Mount Gibson reported a net profit of $96.3 million in the 2014 financial year.