04/11/2014 - 13:27

Aditya Birla faces $225m impairment

04/11/2014 - 13:27

Bookmark

Save articles for future reference.

Copper producer Aditya Birla Minerals has flagged impairment charges in the range of $175 million to $225 million in its upcoming half-year financial report, resulting from mining set-backs, potential asset divestments, and devaluation of its heap leach inventory.

Aditya Birla's Nifty underground copper mine was reopened in July.

Copper producer Aditya Birla Minerals has flagged impairment charges in the range of $175 million to $225 million in its upcoming half-year financial report, resulting from mining set-backs, potential asset divestments, and devaluation of its heap leach inventory.

In a statement today, Aditya Birla reported to the ASX that the highly likely impairment charges were mostly due to the sinkhole incident at its Birla Nifty copper mine.

In March, Aditya Birla was forced to close its Nifty mine in the Pilbara by the Department of Mines and Petroleum, after a sinkhole developed in the underground site.

The company’s stock plummeted after production was cut back, leading to a 37 per cent drop in sales revenue for the March quarter.

The company was also mired in an industrial relations dispute after putting the mine’s 400 workers on indefinite unpaid leave following the incident.

At least 100 of the workers later accepted voluntary redundancies, while others threatened legal action.

Mining activities recommenced at Nifty in July, however Aditya Birla today said the incident “had led to access restrictions in relation to certain sections of the ore body and a change in proposed mining method for the south and west limbs”.

Also factoring into the significant impairment charge, Aditya Birla said it was considering a potential divestment of its Birla Mt Gordon copper project in Queensland, which would result in the assets being materially impaired.

“The company has not reached any legally binding agreement as to the sale of the Mt Gordon assets,” the company said.

Aditya Birla halted operations at Mt Gordon in March last year, blaming poor production performance, uncertain economic conditions and a weaker copper price for the decision.

The company said operating costs at the site had become unacceptably high and were negatively impacting overall profitability.

Aditya Birla also said it had received disappointing preliminary results of recent drill testing on the heap leach inventory at Nifty.

“The preliminary data received to date indicates that there may be the need to substantially impair this asset,” it said.

Aditya Birla said the results for the six months to 30 September would be released by the end of the month.

Its share price closed 12.5 per cent lower at 21 cents per share at the close of trade.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options