BC Iron has released its quarterly activities report, announcing successes in cutting costs but has foreshadowed a future impairment.
BC Iron has released its quarterly activities report, announcing successes in cutting costs but has foreshadowed a future impairment.
Through cost-cutting measures the miner was able to reduce its all-in cash costs for its Nullagine Joint Venture (NJV) project to $58 a wet metric tonne in the June quarter.
The company said it received a price of US$49 a dry metric tonne ($63/dmt) for its ore during the three month period.
In its statement, BC Iron said the quarter’s costs were affected by wet weather in April and May, which affected shipping.
It said the Iron Valley project, which is operated under an iron ore sale agreement by Mineral Resources, yielded 1.19 million dmt of ore, creating $1.9 million EBITDA, which was knocked down to a $1 million EBITDA figure by adjustments relating to previous periods.
BC Iron’s cash position fell $39.8 million to $67.7 million during the quarter, but it says that this was largely due to a $40.2 million repayment of the remaining balance of its term loan facility.
Total debt outstanding was reduced to $6.5 million through that repayment.
The company said it was completing an ongoing assessment of its assets, with the view towards making an as-yet-undetermined impairment in its end-of-year results.
Sales and operating costs were well within guidance, it said, and capital expenditure was better than expected.
The company argues that its costs are likely to decrease further due to the July changeover of its mining, crushing and screening contractor at NJV from Watpac Civil and Mining to Viento Group.
The March announcement of Viento’s contract for the crushing and screening was intended as a vital cost-saving measure, as was the subsequent announcement in April that BCI would be terminating Watpac’s mining services contract early in favour of a new contract with Viento.
Viento went into administration in late April, but BCI said at the time that it did not expect that to affect Viento’s operations at the site.
In its guidance for the new financial year the company is currently expecting that NJV will yield 4.9-5.3 million wmt in the period until June 30 next year.
The company expects NJV cash costs for the 2016 financial year to be in the range of $42-45/wmt, with all-in cash costs expected to total $48-54/wmt for the period.
The slightly lower production rates for the coming year are expected to help the company to reduce capital expenditure on the higher cost Bonnie East and Coongan mesas.
Capital expenditure relating to NJV is predicted to in the range of $16-19 million in the 2016 financial year.
Earlier this year BCI received a 50 per cent royalty relief rebate from the state government, worth an estimated $8-12 million.
BC Iron shares were down 3 per cent to 28.5 cents a share at 1.15 pm AWST.
