LONDON (Alliance News) - Metminco Ltd Friday said its loss multiplied in 2015 after booking a substantial impairment against its mine in Chile due to the ongoing uncertainty over when, or if, the company will secure the necessary mining rights for the operation.
The mining company, which is advancing projects in Chile and Peru, reported a pretax loss of AUD49.1 million in the 2015, driven by a substantial impairment against its Mollacas mine, compared to a loss of AUD12.9 million in 2014.
Metminco impaired its Mollacas project to the tune of AUD43.5 million whilst also booking a AUD2.8 million provision related to VAT in Chile.
"In light of the decision by the Chilean Supreme Court to uphold a prior ruling by the Court of Appeal of Region IV, which overturned a decision granting access for mining purposes to Hampton Chile, from a lower court, the directors are now in the process of evaluating other alternatives to secure mining access rights," said Metminco.
"Whilst the directors believe the Mollacas project has value, as a result of the uncertainty surrounding the timing of obtaining the mining access rights, and the impact this has on the timing of further developing the project, the directors have considered the requirements of the relevant accounting standards and have determined that there are impairment indicators," the company added.
Metminco said that, following the impairment, Mollacas has a recoverable value of only AUD3.9 million, which is the value of the land and water rights owned by the company.
The company also had a low cash balance of AUD950,000 at the end of 2015 despite conducting two placings, one in March 2015 and one in November, alongside a rights issue in May.
Metminco spent all of its capital expenditure budget in 2015 on its other most advanced project, the Los Calatos copper and molybdenum copper mine in southern Peru, due to the ongoing problems at the Mollacas copper mine in Chile.
That work led to a mineral resource estimate being published followed by a strategic mining study being published in September. Metminco has been in talks with interested parties about joining the Los Catalos project since then, but said Friday it would wait for an offer that "secures real value for shareholders".
"Against a global backdrop of robust long-term copper demand, depleting copper reserves, and given both its location and environmental disposition, the Los Calatos project is a valuable asset which has the potential to be an important future copper producer," said the company.
Metminco shares were trading up 4.9% to 0.247 pence per share on Friday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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