In its FY2013 financial results, Mincor gave investors
another taste of just how focused it has been on improving
efficiencies, cutting costs, maximising grade and increasing
operating margins.
Despite a 15% plunge in the average received nickel price
for the year to A$7.59/lb, it was still able to generate positive
earnings from operations for the year of $27.9 million, reflecting
an impressive cash operating cost (including royalties) of
A$5.34/lb on production of 9,688 tonnes of nickel-in-ore from
its Kambalda mines.
These healthy cash flows from the Kambalda engine
room enabled it to fund $7.5 million in dividend payments to
shareholders (a 4 cents per share, fully franked payout for the
year), $18.19 million in mine capital development and $14.9
million in exploration.
The bottom line net loss of $22.5 million for the year was
an accounting (non-cash) result reflecting exploration write-offs
(
mainly from its venture in Papua New Guinea) of $15.1 million,
a $2.8 million impairment against its McMahon nickel mine,
and depreciation and amortisation charges.
“
We had a $27 million cash inflow from operations before
capital and exploration expenses for the year in what was
really an
annus horribilis
for the nickel industry, and I think
that’s a great result,” said Mr Moore. “It was a solid operational
performance and allowed us to still reward shareholders with
a final 2 cents per share fully franked dividend.”
The tenacity of Mincor’s approach and its impressive track
record now spanning 12 years of nickel mining in Kambalda
was not lost on investors at the 2013 Diggers & Dealers
Mining Forum, where Mr Moore was once again one of the
standout presenters.
From a once-only equity raising of $5 million in 2001,
Mincor has been able to generate profits to date of $233
million and return $118 million to shareholders in dividends,
while retaining a strong balance sheet (no debt and cash of
$59.6 million as at 30 June 2013) and tight capital structure
(188
million shares on issue).
Mr Moore said the company will remain focused on its core
businesses of mining and exploration in Western Australia
during the 2014 financial year, winding back more expensive
growth initiatives such as its PNG exploration venture in light
of current market conditions.
“
We have a great core business in Kambalda that generates
plenty of cash and enables us to fund both mine development
and exploration,” he said. “More importantly, we believe there
are still many exciting organic growth opportunities within
our Kambalda and Widgiemooltha tenements.”
One opportunity remains near-mine and in-mine exploration,
with two owner-operated underground diamond drilling rigs
working around the clock at Kambalda to grow resources and
reserves and extend mine life.
Another remains the potential for a greenfields discovery,
and Mr Moore is clearly excited by recently discovered gold
potential on its Widgiemooltha tenements, including the
priority MW gold target, where drilling is about to commence.
“
It is about as good a target as you will ever find in the Western
Australian goldfields,” said Mr Moore.
Mincor has budgeted $22 million to capital and exploration
initiatives in Kambalda for the 2014 financial year. This includes
$5 million for ongoing capital development of its mines and
$7 million to pursue high quality nickel and gold exploration
targets “right in our own backyard”.
Given its tight cost structure, Mincor remains a massive
leverage opportunity on the nickel price – with any price
improvement likely to flow straight to its bottom line given its
unhedged production profile.
“
With current low prices generating no new investment
in supply, I still foresee the possibility of a supply shortage
emerging at some point which could drive the price up quite
rapidly. I guess I have been saying that for a while now, but
at some point the worm will turn for nickel – and it’s likely to
happen quickly and when people least expect it.”
Miitel nickel mine
CAZALY RESOURCES LTD.
A Diversified Minerals Exploration
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www.cazalyresources.com.au