17/02/2006 - 08:40

Jubilee first half profit down

17/02/2006 - 08:40

Bookmark

Save articles for future reference.

Jubilee Mines today announced interim financial results for the December 2005 half year, reporting a net profit of $23.3 million - significantly down on the $45.1 million profit for the same period the previous year.

Jubilee Mines today announced interim financial results for the December 2005 half year, reporting a net profit of $23.3 million - significantly down on the $45.1 million profit for the same period the previous year.

The decline in results was put down to lower sales revenue of $85.5 million (against the 2004 result of $115.2 million) translating directly through to the bottom line.

Pre-tax profit was $33.6 million ($66.0 million in 2004), and the result equated to earnings per share of 18.2 cents (basic) compared with 36 cents for the previous corresponding half.

Jubilee said it maintained its strong commitment to maximise shareholder returns by declaring a fully franked interim dividend of 13 cents per share, representing a 72 per cent payout ratio.

Jubilee's executive chairman, Kerry Harmanis, said the result reflected the previously announced effects of lower nickel prices, slightly reduced production and higher operating costs.

 

THE FULL MEDIA RELEASE APPEARS BELOW:

Jubilee announces $23.3M first half profit

Jubilee Mines NL (ASX: JBM) today announced its interim financial results, reporting a net profit of $23.3 million for the December 2005 half year. Notwithstanding the lower bottom line earnings, Jubilee's Board maintained its strong commitment to maximise shareholder returns by declaring a fully franked interim dividend of 13 cents per share, representing a 72% payout ratio.

Jubilee's Executive Chairman, Kerry Harmanis, said the result reflected the previously announced effects of lower nickel prices, slightly reduced production and higher operating costs but pointed to a stronger second half financial outlook - underpinned by more robust second half production, provided nickel prices remain at about current levels.

The first half net profit compared with a $45.1 million net profit for the previous corresponding half, with the variation predominantly attributable to lower sales revenue of $85.5 million (2004: $115.2 million) translating directly through to the bottom line. Gross profit was $34.8 million (2004: $66.2 million), while pre-tax profit was $33.6 million (2004: $66.0 million). The result equated to earnings per share of 18.2 cents (basic) compared with 36 cents for the previous corresponding half.

The key drivers behind the first half result were the significant fall in the nickel price from the highs of the six month period, which resulted in a corresponding downward revaluation of the 'pipeline' of nickel sales during the half, lower nickel sales (4,651 tonnes of nickel in concentrate as against 5,703 tonnes for the December 2004 half), and a slight increase in operating costs, reflecting industry-wide cost pressures.

As at the 31 December 2005 balance date, Jubilee maintained its strong financial position with cash and receivables from Inco totalling $101.8 million and no debt.

Mr Harmanis said the first half performance demonstrated the underlying strength of the Cosmos operations and their ability to generate solid margins and profits at all phases of the commodity cycle, including periods of increased volatility in the nickel market.

"A key focus during the period was on cost control both at our existing operations and new mine development projects," he said. "It is pleasing to note that, while our operating costs have increased partly due to industry-wide cost pressures and partly due to lower grades than previously mined, our total costs for the period remained within budget."

"Very importantly, during the first half we were successful on a number of other levels with continued resource development and exploration success including the discovery of two new significant nickel sulphide zones, firstly at Tapinos, where a rapid drill-out resulted in an initial resource estimate of 10,500 tonnes of contained nickel, and secondly nearby at Anomaly 9," Mr Harmanis said. "At Anomaly 9 we believe we have identified a major new mineralised trend with the potential to host high-grade nickel sulphides, again demonstrating the remarkable prospectivity of the largely untested zone between Prospero/Tapinos and Cosmos."

The Alec Mairs Lower Decline is nearing completion, with approximately 100 metres of development remaining and several underground drilling positions already established. A major underground exploration program has recently commenced to explore this highly prospective area, which now forms part of the existing underground mine infrastructure at Cosmos Deeps.

The Alec Mairs Complex represents a high exploration priority because it provides easy access to ore and contains numerous high-grade targets which have been awaiting drilling pending completion of the Lower Decline and underground drilling positions. "We are confident that this area will deliver significant additional resources for us," Mr Harmanis said.

During the first half, the focus for exploration at Prospero was on in-fill drilling designed to increase both the JORC confidence level and grade of the known resource. These results are currently being compiled and are expected to be incorporated in a revised resource estimate to be released shortly. A new drilling program targeting extensions to the Prospero deposit at depth, down-plunge to the south, as well as up-plunge to the north commenced earlier this year and is ongoing with 4 surface rigs currently active on a 24-7 basis. The new Helene Decline to access the Prospero and Tapinos orebodies continues, with 784 metres of development completed to date.

At Anomaly 1, near-surface drilling is also underway aimed at increasing the resource in close proximity to the Cosmos pit following positive indications of the potential in this area.

"In addition, consistent with our medium to long term objective of developing new assets outside of the immediate Cosmos area, we have identified an exciting new prospect at Sinclair, located within the 100%-owned Bannockburn Project, 90km south of Cosmos. The overall potential in this 45 kilometre trend is outstanding and drilling has only just recommenced," he added. "Additionally, at the Acra Project, east of Kalgoorlie, follow up work is about to start on a new mineralized zone, that was identified before Christmas, prior to a drilling program being undertaken later in the year."

OUTLOOK

Operationally, the Cosmos Deeps mine plan is for continued steady operations with slightly increased average grades and production tonnages from the stoping levels scheduled for extraction during the second half. Full-year production for 2005/06 is forecast at around 11,000 tonnes of nickel in concentrate.

With the rebound in nickel prices since late 2005, the financial outlook for the second half is much stronger, although the full extent of this remains dependent on the nickel price remaining at strong levels.

Jubilee is also advancing the expanded feasibility study on the Prospero/Tapinos development, which is assessing opportunities to expand production from Cosmos to a long-term level of 15-20,000tpa by 2007/08, subject to further additions to the resource inventory. The first formal phase of this study is scheduled for completion during June/July 2006, and will provide a blueprint for the next phases of the Cosmos operations.

"With such a full book of exploration and development activity, and growing confidence in our broader geological understanding of the Cosmos area, we are very confident that the second half will continue to deliver significant further additions to our resource inventory as well as continued exploration success," Mr Harmanis added.

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options