23/02/2006 - 13:48

Minara posts annual profit of $43m amid plant interruptions

23/02/2006 - 13:48

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Perth-based miner Minara Resources Ltd recorded an annual net profit for 2005 of $43 million, with product sales higher than the previous year despite the impact of plant interruptions.

Minara posts annual profit of $43m amid plant interruptions

Perth-based miner Minara Resources Ltd recorded an annual net profit for 2005 of $43 million, down on the previous year's $172.1 million (including extraordinary items), with product sales higher than the previous year despite the impact of plant interruptions.

Minara's CEO Peter Johnston said "Minara ends the financial year with a strong balance sheet, minimal debt and a cash balance of $72 million."

However, the company said overall profit was impacted by the statutory shutdown and restarts and the July acid spill, as well as allowances and write-downs totalling $14.8 million, and also included the loss on the sale of the decomissioned mining fleet of $4.7 million.

Revenue from operations was $361.4 million for the year ended, while consolidated shareholder equity was $497.1 million.
A dividend of 5 cents per share has been declared to be paid on 24 March 2006.

Below is the full announcement:

FULL YEAR PROFIT OF $43 MILLION


Highlights

  • Full year profit of $43 million
  • Dividend to shareholders of 5 cents per share
  • Heap Leach R&D Project progressing
  • Completion of mining capital equipment purchase program
  • Statutory shutdown completed

 

Financial

Minara recorded an annual operating profit for 2005 of $43.0 million (2004: $172.1 million
included extraordinary $84.4 million (net) arising from the Fluor settlement agreement). The
overall profit was impacted by the statutory shutdown and restarts and the acid spill in July,
as well as allowances and write-downs totalling $14.8 million, and also included the loss on
the sale of the decommissioned mining fleet of $4.7 million.

Product sales for the 2005 financial year were higher than in the equivalent previous period
despite the impact of interruptions to the plant. Cash on hand at 31 December 2005 was
$72 million and consolidated shareholder equity was $497.1 million. This is marginally less
than at 31 December 2004 ($498.5 million), following the payment of dividends to
shareholders during the period of 10 cents per share (totalling $46.5 million).

A dividend of 5 cents per share has been declared to be paid on 24 March 2006.

Significant items in the result include:

Financial results ($ million)

Year ended 31 December 2005

Revenue from operations 361.4

Gross profit/(loss) 67.7

Net profit/(loss) 43.0

Metal prices in the reporting period ended 31 December 2005 were 2.6% higher than in the
previous calendar year when expressed in Australian dollars and 6.4% higher in US
dollars. Metal despatched for sale was 0.5% higher than in the previous 12 months.
Minara remains unhedged on nickel price and currency exposure.

Murrin Murrin Production: 31 December 2005
Nickel production (Tonnes) 28,240

Cobalt production (Tonnes) 1,750
(Minara's share is 60%)

Production for the year increased over the previous period however it was impacted by the
scheduled biennial three-week statutory maintenance shut in April. Though the shut
proceeded according to plan the plant's restart was delayed by previously reported
unscheduled remedial welding inside vessels in the hydrogen sulphide plant.

In late June an acid spill occurred, resulting in piping corrosion that limited acid plant
production in July which in turn limited nickel/cobalt leach autoclave throughput. Plant
performance in August, September and October was encouraging before two planned
maintenance events and restart issues in the hydrogen sulphide plant in November.
December was a record month for production.

C1 costs for the last 6 months were net US$4.10 per pound after cobalt credits. The costs
are high but this period includes the reduced nickel production numbers in July and
November as referred to above. It is expected that costs will be below US$3.50 at the
budgeted 36,000 tonnes production rate and at design capacity costs will fall below
US$3.00 per pound.

The slow, but steady improvement in the overall production profile, particularly at the front
end, is encouraging. As the front end performance has improved the maintenance focus
has shifted to the utilities area of the plant, specifically the acid plant and hydrogen
sulphide plant. Maintenance will remain the dominant issue over the next twelve months.

Health & Safety

The Company recorded an increase in the lost time injury frequency rate from 2.21 to 7.07
occurrences per million man hours worked in the twelve month financial period to 31
December 2005. This decline in safety performance was predominantly recorded prior,
during and following the statutory maintenance shut in April/May, and includes contractors.
The Company's safety performance outside this period was similar to the previous year.

Heap Leach Project

A 200,000tpa, $25 million, Heap Leach Demonstration plant was approved during the
December quarter and engineering commenced in January 2006. This heap leaching will
utilise stockpiled ore reject material ("scats") with nickel and cobalt production expected by
the end of 2006. The demonstration plant will enable the company to fully understand all
associated technical issues over the next 12 to 18 months including the potential to expand
to a commercial scale.

The $12 million, two year, heap leach R&D program which focuses on processing ore
rather than scats is continuing with test work and development to progress throughout
2006.


Capital Program

A complete new mining fleet comprising 26 items of Caterpillar and Hitachi equipment was
progressively delivered to Murrin Murrin over the course of the year and the corresponding
existing mine fleet retired. The fleet replacement and new tyre contracts have guaranteed
equipment availability at a time when the industry is experiencing extremely tight market
conditions and non availability of earth moving equipment.

Corporate

Minara reached a commercial resolution with Glencore in respect to alleged breaches by
Minara and related bodies corporate of joint venture agreements arising out of the
construction phase of the Murrin Murrin Nickel Cobalt plant. As a result Glencore has
discontinued its $36 million claim previously disclosed as a contingent liability in Minara's
accounts since 1998.

Minara has agreed to extend the area, which is subject to the Murrin Murrin Joint Venture
(Minara 60%) from a radius of 60km to 200km from the Murrin Murrin plant.


CEO Comments

Minara's CEO Mr Peter Johnston said: "Minara ends the financial year with a strong
balance sheet, minimal debt and a cash balance of $72 million."

"Whilst the plant's performance continues to be a focal point for us we are pleased with the
improvement in operational performance over the past six months.

"It also is pleasing that the benefits of our capital spending program implemented over the
last two years particularly in the front-end of the plant are now being realised.

"The challenge is to address the maintenance issues associated with the utilities area of
the plant and to consolidate our production profile during 2006. We also believe that our
investment in the heap leach project will deliver considerable benefits to Minara," Mr
Johnston said.


ENDS




About Minara

Minara Resources Limited is a leading Australian resources company, based in Perth.

Founded in 1994, Minara Resources (formerly Anaconda Nickel Limited) owns and
operates the Murrin Murrin nickel cobalt joint venture project (60% Minara, 40% Glencore
International AG) near Leonora in Western Australia's historic northern goldfields region.

Murrin Murrin is a world-class hydrometallurgical project, offering significant environmental
benefits compared to traditional smelting processes.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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