A total of 270 jobs will be slashed by Australia's Mount Gibson Iron Ltd from its Koolan Island operation off Western Australia's north Kimberley coast.

The cuts, which mostly involved 140 contractors, were blamed on the prevailing volatile prices of the key steelmaking ingredient iron ore in the world market.

"While it is encouraging that iron ore prices have firmed in the past week or two, and we remain confident in the long term outlook for iron supply to Asia, the immediate market outlook remains uncertain," Jim Beyer, Mount Gibson chief executive officer, said in a statement.

"In these circumstances, the only prudent course of action is to implement comprehensive measures that control costs and enable our operations to remain cash positive across the price cycle, including the low points. The initiatives we have announced today will maximise our cash flow and preserve our financial capacity in volatile and challenging conditions.

"Nonetheless, it is always a difficult decision to reduce your workforce, and we will be providing as much assistance as we can to those people affected by the changes we have announced today."

The cost-saving measures, according to the company, would save it some $120 million to $150 million in capital and operating expenditure.

Moreover, the Perth-based company disclosed that members of its board and senior executive management have approved to a 10 per cent reduction in their total remuneration packages for the financial year.

At 1355 AEDT, according to the Business Spectator, shares of Mount Gibson jumped 19.55 per cent to 79.5 cents against a 1.13 per cent rise in the benchmark index.