Perth-based nickel and cobalt exploration company Minara Resources Ltd late yesterday posted a half-year net profit of $100.7 million, a 610 per cent increase on the $16.5 million earned the same time last year.
Perth-based nickel and cobalt exploration company Minara Resources Ltd has posted a half-year net profit of $100.7 million, a 610 per cent increase on the $16.5 million earned the same time last year.
A statement from the company attributes the profit boost to a 50 per cent boost in nickel prices, though cobalt prices were lower during the corresponding period.
Minara also announced construction on its Heap Leach project remains on schedule, and is due to be operational by the end of 2007.
The company has declared a dividend to shareholders of 12.5c per share, to a total value of $58 million.
SUMMARY OF EVENTS
o Dividend of 12.5 cents per share declared
o Strong net profit of $100.7 million for the half year
o Cash on hand of $111 million at end June 2006
o Successful installation of acid demister in July improves production reliability
o Nickel market fundamentals remain sound
MURRIN MURRIN OPERATIONS
The Company recorded a net profit after tax for the half year to 30 June 2006 of $100.7 million.
This represents a significant increase on the $16.5 million recorded in the corresponding period in 2005.
The Company recorded a gross profit from the sale of product of $122.2 million.
A dividend of 12.5 cents per share, approximating $58 million has been declared.
The dividend will be unfranked and paid on 22nd September 2006.
The record date for the dividend will be 8th September 2006.
As at 30 June 2006 cash on hand totalled $111 million. Minara remains unhedged in both currency or commodity.
The Company recorded a half year consolidated gross profit from ordinary activities of $122.2 million and a profit after tax of $100.7 million for the financial period ended 30 June 2006. C1 costs for the period were US$4.17 /lb.
The improved profitability of the operation was largely driven by strong nickel prices which were partially offset by lower cobalt prices. Nickel prices achieved were 50% higher than the previous half-year while cobalt prices showed a decline of 17%. Tonnages sold increased by 302 tonnes of nickel (3.8%) and 32 tonnes of cobalt (6.2%).
Total shareholders equity increased by $76.5 million to $574 million pre-dividend distribution. This was as a result of profits recorded in the period offset by the dividend payment to shareholders in March totalling $23.2 million and a minority contribution to operational costs.
Production at Murrin Murrin for the six months to 30 June 2006 was 14,060 tonnes of nickel packaged and 1,005 tonnes of cobalt packaged. The Company's share is 60%. The previous corresponding six months period saw 13,356 tonnes of nickel packaged and 773 tonnes of cobalt packaged.
A steady improvement in the overall high pressure acid leach production capability was seen during the period. Production was however affected by corrosion in the duct work around the acid plant blowers.
This has since been mitigated by the successful installation of an acid demister as an interim measure until the replacement of the super heater during the scheduled maintenance shut in October 2007.
Construction on the 200,000 tpa heap leach demonstration plant has progressed with the heap leach pad and pond civil construction 70% complete, and plastic lining about to commence. In addition all long lead time items have been ordered and final procurement of remaining equipment and materials is 80% completed.
The project remains on schedule with project completion due mid-December 2006 and the Company anticipates that it will be operational, producing at a rate of approximately 2,000 tonnes of nickel metal and 150 tonnes of cobalt metal per annum by the end of 2007.
The heap leach project delivers a second, independent nickel stream and will further utilise the plant's refining capacity.
Major capital expenditure in the period included engineering, procurement and construction of the
heap leach demonstration plant.
The Grey Mare bore field project, reported previously, has also commenced construction.
A number of minor capital projects to improve plant reliability and capability were completed in the
Exploration for nickel sulphide mineralisation continued under the Irwin Hills-Coglia Wells JV (Murrin Murrin JV 60%) the Bardoc JV (Company 51%) and the Weld Range JV (Company 75%).
As a result of the first and second stages of the Irwin Hills-Coglia Wells JV drilling programs, the indicated and inferred resource for the project is 19.9 million tonnes at 1.02% nickel and 0.12% cobalt at 0.8% cut-off.
During the period, the Bardoc JV focussed on disseminated sulphides locating in the western zone.
The Weld Range JV reviewed geophysical data and completed a ground TEM during the period.
The fundamentals of the nickel market remain sound with strong demand and limited new supply.
Nickel demand is directly tied to stainless steel production. Nickel consumption over the past two to three years has been driven by economic growth in China. On the supply side there has been limited surplus material on the LME and no new major projects coming on stream. As a result
there has been a substantial increase in the nickel price over the period.
"We are pleased to announce today a net profit of $100.7 million for the period enabling us to pay a dividend of 12.5 cents per share to shareholders totalling approximately $58 million," Minara CEO Peter Johnston said.
"Production at Murrin Murrin operations in the first half was constrained by acid plant performance.
However, since July production has been steady with no significant issues affecting plant performance. Construction of the 200,000 tonne per annum heap leach demonstration plant is on schedule and within budget and we expect to commence production in December this year," Mr Johnston added.