Perth-based gold miner Focus Minerals has posted its first profit of $3.15 million despite limitations imposed by a toll-treating arrangement.
Perth-based gold miner Focus Minerals has posted its first profit of $3.15 million despite limitations imposed by a toll-treating arrangement.
The announcement is below:
Emerging gold producer Focus Minerals Limited (ASX: FML) has posted a standout maiden net profit of $3.15 million and Earnings before Interest, Taxation, Depreciation and Amortisation (EBITDA) of $15.9 million for the 2009 financial year, confirming that it is well on the way to becoming one of Australia's most profitable mid-tier producers.
The result was achieved despite the fact that Focus could treat ore from its high-grade Perseverance underground mine at Coolgardie for just six months of the year due to its reliance on a toll-treating arrangement.
This restricted gold production to 41,401 ounces and meant that Focus had to stockpile ore containing 10,000 ounces in the last quarter of the financial year. Cash operating costs for the financial year averaged $603 per ounce.
However, with refurbishment of Focus' 1.2 million-tonne-a-year Three Mile Hill plant scheduled for completion in November, the Company is forecasting production to increase to 80,000 ounces in 2010, and over 100,000 ounces from 2011 onwards.
Focus' maiden profit stemmed from the start of mining at its Tindals Mining Centre at Coolgardie in April 2008. Production from Tindals will be supplemented later this year by production from The Mount, a 350-000-ounce deposit located 80km south of Tindals, where decline development recently commenced.
The maiden profit for the 2009 financial year was struck on a Gross Profit of $22.9m which is based on sales revenue of $44.6m (from the sale of 42,404 ounces of gold) at a cost of sales of $21.0m.
Focus Chief Executive Officer Campbell Baird said the Company's strong underlying profit highlighted how financially robust its operations were, particularly given the limited time it was in production during the year and the limitations imposed by the toll-treatment arrangement.
"This maiden profit highlights Focus' fantastic growth outlook," Mr Baird said. "Production will double over the next year or so and our costs will fall because we will be treating the ore at our own plant and realising the benefits from much greater economies of scale.
"The growing cash flow will also ensure that we can convert a substantial share of our 1.8 million-ounce resource base into reserves, giving Focus a long-life operation with robust margins and a strong growth profile."
