Australia's mounting mining sector crisis escalates as another mining firm on Monday slashed jobs and suspended exploration plans in the face of the dropping prices of iron ore in the world market.

Norwegian-focused Australian iron ore miner Northern Iron, amid competing takeover bids, announced it had suspended exploration activities as well as slashed the number of its personnel as it embarked on a cost-cutting program to maintain fiscal viability and stability.

"The company is continuing to closely monitor its cash position and production performance against the background of these difficult market conditions and will take action as required to maintain an acceptable working capital position," John Sanderson, managing director, said in a statement.

It was not detailed how many permanent and contract employee positions were slashed.

Spot prices of key steelmaking ingredient iron ore, which dove to a low $87 a tonne in the first week of September 2012, its lowest in three years, have forced most of Australian mining companies to do the inevitable - shutdown non-performing operations, reduce costs, withhold investments as well as slash manpower.

Company shares dropped on the pronouncement, falling by seven cents, or eight per cent, at 79.5 cents at 1101 AEST.

Meantime, the company, which operates the Sydvaranger magnetite mine in Norway, said it has advised both of its suitors to continue its due diligence conduct, noting it expects the detailed stage two due diligence process to be finished within weeks.

In July, Northern Iron received separate takeover bids from Swiss-based trading house Prominvest AG at $525 million and from India's Aditya Birla Group at $518 million.

Northern Iron said both companies over the last two weeks have attended site visits to the operation in Norway.