LONDON (Alliance News) - Metminco Ltd Wednesday reported a significantly narrower 2014 pretax loss after booking fewer impairments, and said it continues to advance its projects in Chile and Peru and discussing potential mergers and acquisitions as it struggles to fund future project development.
The exploration and mining company has an asset base comprising two development opportunities, Los Calatos and Mollacas, and two prospective exploration projects, Vallecillo and Loica, all located in Chile and Peru.
Metminco reported a USD12.9 million pretax loss for 2014, compared with the USD36.1 million loss it reported in 2013. It booked USD7.2 million in impairments against its Vallecillo and Loica projects in 2014, compared with the USD31.9 million of impairments booked in 2013. It only generates a small amount of revenue at the moment.
It wrote down the full value of the Vellecillo project in Chile in its accounts after deciding that additional mineral resources needed be identified to justify the establishment of an economically viable mining operation. It's not planning any work at the project this year. At Loica in Peru, an exploration program is required that incorporates deep-penetrating geophysical methods and a staged diamond drilling program in order to confirm the geometry of the porphyry system and to assess the tenor of the porphyry style mineralisation at greater depths than those tested to-date. It didn't work on the project in 2014 and isn't planning to this year.
Metminco's two main projects are the Mollacas copper project in Chile, where a planned feasibility study and an environmental impact study has been delayed pending resolution of a dispute pertaining to land access with one of the surface title holders, and the Los Calatos project in Peru, where it's trying to find a funding partner so it can progress with a pre-feasibility study and a feasibility study.
At the end of December, the company reported a cash balance of USD1.2 million.
"Metminco is an exploration company currently without an operating cash inflow and the net cash position of the group will continue to decrease until such time as the group has an operating cash inflow," said the company.
"These conditions give rise to a material uncertainty that may cast significant doubt upon the group's ability to continue as a going concern," it added.
Metminco said that despite the concerns, the directors are confident the company can fulfil its financial obligations in 2015.
"It is clear that under current market conditions, particularly as it impacts on the junior resource sector, Metminco's strategy needs to have a measure of flexibility to accommodate developments in the context of its own projects, as well as to take advantage of potential acquisition opportunities as they arise. As such, considerable time and effort has been invested, with the support of RFC Ambrian and others, in developing funding strategies that will facilitate the attainment of the company's future growth plans," it said.
The company said it is continuing with discussions with third parties in relation to merger and acquisition opportunities and will be continuing expenditure on evaluation of opportunities during the current quarter. It will be focusing primarily on advancing the Los Calatos and Mollacas projects.
"Whilst a number of companies have reviewed the project, the downturn in the resource sector and heightened market sensitivity to capital intensive projects, has precluded a transaction from being effected," it said of Los Calatos.
Metminco shares were down 5.9% to 0.278 pence per share on Wednesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
