Shares in Consolidated Minerals surged above $3 this week after the company reported increased production and higher profits from its manganese and chromite mining operations.
The value of ConsMin’s shares has doubled over the past six months, lifting its market capitalisation to about $550 million, making it one of Western Australia’s biggest mining companies.
The company has reported an operating profit after tax of $22 million for the half-year to December, up from $7.3 million in the previous corresponding period.
In addition, ConsMin recorded an after-tax profit of $19 million on the sale of its stake in iron ore producer Portman, which has since agreed to a takeover proposal from US company Cleveland Cliffs.
ConsMin said the interim profit laid the foundation for a very strong full-year result, underpinned by traditionally stronger second-half operating conditions and increased prices.
Bell Potter Securities analyst Matthew Ward said the interim profit was a strong result and tipped an even better second half.
“We expect positive near-term news flow to continue with a double-digit manganese benchmark price increase and an increase in manganese ore resources,” Mr Ward writes in a research note.
“Nickel exploration should also intensify over the next six months.”
Mr Ward has forecast a full-year profit (excluding the abnormal gain) of $87.4 million, up from $25.1 million last financial year.
This equates to earnings per share of 35.3 cents, up from 14.1 cents.
The profit result coincides with ConsMin’s takeover bid for nickel producer Reliance Mining, which is part of its strategy of building a nickel business unit.
The link between manganese, chromite and nickel is that all three minerals are used in the production of steel or stainless steel, and all have benefited from the current boom in China.