Territory Resources has announced $24.5 million quarterly earnings based on record operating revenue of $67.3 million.
Territory Resources has announced $24.5 million quarterly earnings based on record operating revenue of $67.3 million.
The company said it was as a result of a 29.8 per cent increase in iron ore shipments for the 2010 financial year as is based on earnings before tax and amortisation (EBITA).
A total of 564,249 tonnes of high-grade lump and fines ore were shipped from the Company's Frances Creek iron ore operations in the Northern Territory during the quarter.
This was more than double the 267,582 tonnes of high-grade lump and fines ore shipped in the March 2010 quarter.
Territory also announced that during the quarter it reduced the debt it owed to Hong Kong commodities group Noble.
The company also reduced the Noble core debt by $6.02 million. At 30 June 2010, the core debt amounted to $36.47 million
Full company statement below:
PRODUCTION AND SALES
Territory Resources Limited (ASX: TTY) posted an excellent operating and financial performance during the June Quarter, finishing the 2010 financial year strongly, with a 29.8% increase in iron ore shipments for the year to 2,027,385 tonnes (FY 2009: 1,562,517 tonnes).
A total of 564,249 tonnes of high-grade lump and fines ore were shipped from the Company's Frances Creek iron ore operations in the Northern Territory during the Quarter; more than double the 267,582 tonnes of high-grade lump and fines ore shipped in the March 2010 Quarter (see attached PDF for shipments graphic and production table).
Sales performance was underpinned by a continued robust operating performance at the Frances Creek Mine. A total of 539,906 shippable tonnes of high-grade lump and fines ore was produced for the Quarter, capitalising on pre-strip and development activities undertaken during the wet season in the previous Quarter. Ore production was sourced from the Thelma Rosemary, Ochre Hill and Helene 6/7 and newly opened Helene 3 and 5 pits.
The healthy production and shipping performance has enabled Territory to take advantage of the prevailing iron ore prices to achieve an unaudited EBITDA for the Quarter of $24.5 million (including Monarch bad debt recovered of $3.2 million and after allowing for asset impairments of $1.3 million) on operating revenue of $67.3 million.
The appointment of the experienced contracting group Barminco Limited as the Crushing Contractor at Frances Creek in March 2010 has provided the Company with more than enough crushing capability and capacity to meet existing and future production needs.
Construction of the Beneficiation Plant is progressing with commissioning scheduled for the second half of 2010. The Beneficiation Plant will enable the Company to process its scalps and low grade ore stockpiles and upgrade them to saleable grade specifications
The Company will also conduct tests to determine if the beneficiation process will be able to upgrade lower grade deposits in the northern regions to extend the mine life of Frances Creek.
RESOURCES AND RESERVES
The Mineral Resource and Ore Reserve models for the Frances Creek operation are being updated, with the open pits being re-designed to take into account recent price increases as well as earlier product specification changes.
This re-optimisation is expected to result in a conversion of additional Indicated Resources to Ore Reserves, potentially enhancing the mine life at Frances Creek.
An updated Mineral Resource and Ore Reserve Statement is scheduled for release in August 2010.
The Company is also re-evaluating potential extensions of the Helene 6/7 ore body beneath existing site infrastructure with the view to increasing the mine life.
EXPLORATION
Ground-based exploration work at Frances Creek re-commenced during the June Quarter, following the completion of the Northern Territory wet season.
The Company commenced an intensive program of ground-based geophysical gravity surveys late in the Quarter with the aim of identifying shallow, buried or blind iron ore targets north of the Frances Creek Mine as a focus for future drilling activity. The survey was 10% complete by 30 June 2010 and is expected to be finalised by mid-August.
These surveys are specifically aimed at the concealed areas between existing deposits as well as potential extensions of known mineralisation. Following field capture, the data will undergo detailed geophysical interpretation to identify any targets for further work.
Two outlying Exploration Licences at Frances Creek were surrendered during the Quarter as part of a tenement rationalisation initiative.
A major focus for the Company's exploration team is a re-evaluation of potential exploration targets directly surrounding the Frances Creek Mine, where it is thought additional work in testing complex synclinal and cross-cutting structural geological positions to greater depths may provide positive results.
Additionally, metallurgical and geotechnical diamond drilling programs have been budgeted for completion around the mine during the remainder of 2010.
Corporate
Debt Reduction Program
During the Quarter, the Company extinguished the debt owing under the Noble Prepayment Facility.
The Company also reduced the Noble core debt by $6.02 million. At 30 June 2010, the core debt amounted to $36.47 million (US$32.53 million). Territory also finalised an agreement with Noble for an extension of the core debt repayment date to 31 October 2011. However, it is the Company's intention that the Noble debt is retired as soon as possible. If spot iron ore prices and exchange rates remain at current levels, this is expected to occur in the second half of 2010.
Monarch Gold Mining Company
The Company accepted an offer of accelerated royalty payments from the Minjar Trust in respect to amounts owing under the Monarch Gold Mining Company Limited Recapitalisation. Under this offer, amounts totalling $3.25 million are receivable between July 2010 and September 2010. At the date of this report the first instalment of $1.0 million had been received.
Remuneration Review
During the Quarter, the Company introduced a Performance Rights Plan to provide long term incentives to certain senior executives which will align the interests of Management to those of shareholders and reward the creation of shareholder value.
The Board is also in the process of conducting a review of Non-Executive Director fees and the Company has engaged an independent remuneration consultant for this purpose. The Board is currently considering the recommendations provided by the independent consultant and, should an increase in fees be appropriate in order to provide:
fair and reasonable remuneration; and
to retain Directors with the knowledge, skills and experience required to effectively manage and grow the business,
then it is proposed that rights under the Performance Rights Plan be issued in lieu of an increase in cash fees. Any such proposal will be subject to shareholder approval and will ensure alignment of the interests of Directors and shareholders.
As at 30 June 2010, the Company had 264,606,388 shares and 7,808,000 options on issue.
