$3.11/lb, which is still a very good business even at current
depressed nickel prices.”
That enabled Mincor to deliver earnings before interest,
tax, depreciation and amortization for the year of $32.4 million
and earnings from operations of $42.3 million – more than
sufficient to fund $18.9 million in mine capital development,
$12.6 million in exploration and return $7.9 million in dividends
to shareholders.
Mr Moore says the business model it pioneered in Kambalda
over a decade ago, where a series of small-scale mines feed a
central, third-party owned mill, has proved resilient and flexible.
We were able to grow our initial production from a small
base with a single mine, then rapidly expand production into a
massive nickel boom, and then cut back and reduce costs through
the GFC and, most recently, stabilise production at healthy cost
levels during the recent slump in nickel prices.”
The operational changes implemented last year have
coincided happily with a significant uplift in grade at Mincor’s
key nickel mines, with group-wide mined nickel grades climbing
dramatically from 2.6% to an average of 3.1% this year.
Nickel production for 2012 hit over 9,179 tonnes of nickel
contained in ore, and production guidance for the FY2013 is for
production of 9,000 tonnes of nickel at a targeted cash operating
cost of $5.50/lb.
The company’s future profitability remains closely linked
to the nickel price which remains anyone’s guess – although
Mr Moore doesn’t buy the notion it will stay “flat and low forever”.
With current low prices generating no new investment
in supply, we will inevitably bump into a shortage,” he says.
My guess is that demand will start to outpace supply during
2013/2014.”
In the meantime, Mr Moore’s management team will keep a
tight rein on costs to preserve the company’s debt-free status and
strong cash balance of around $76 million, as well as its ability
to pay dividends and generate growth. Key items on the agenda
include annual capital expenditures of around $15 million in
Kambalda to sustain forecast production levels and a group-wide
exploration commitment of $15 million for FY2013.
Apart from production, one of our key strategic goals in
Kambalda will be to continue to replenish ore reserves through
near-mine exploration, which we are confident will boost the
current mine life,” Mr Moore says.
In addition, the maiden drilling programme commenced in
August 2012 at Mincor’s newly-established venture in PNG.
I’m really excited about the potential in PNG, which is one
of the most prospective places on earth. We’ve got hold of some
seriously good ground which could easily deliver world-class
discoveries that would very quickly change the face of Mincor.”
Left page: Otter Juan shaft at sunset. The Otter Juan
nickel mine is Kambalda’s oldest producing mine
Below: Drilling at South Miitel mine, part of
Mincor’s Kambalda nickel operations
Growth through Expansion,
Sustainable Development & Discovery
Nueva Esperanza, Chile
Level 8, 14 Martin Place, Sydney NSW 2000, AUSTRALIA
ph 61 2 8256 4800
Chatree, Thailand
Kingsgate's clear growth strategy
will underpin significant earnings
and dividend growth for all
shareholders.
Kingsgate ticks all the boxes for a premier
mid-tier gold producer:
Resource Growth
Dividend Differential
Production Growth
Growth Opportunities
Strong Cashflow
Challenger, South Australia