LONDON (Alliance News) - Rambler Metals & Mining PLC Monday said its profitability in the second quarter of its financial year was hit by lower grades and declining copper prices, while the company said it remains on target to meet the lower end of its annual production forecast.
Last month, the copper and gold producer, which operates in Newfoundland and Labrador in Canada, revised its mine plan for the remainder of the fiscal year, citing uncertainty in the copper price and an unforeseen decline in copper grade as the reasons behind its decision to implement short-term cost cutting measures and address grade and production issues at the Ming Mine.
To reduce operating expenditures, Rambler said made some employee lay-offs and suspended all non-critical property, land and equipment costs.
Rambler said Monday it produced 1,284 tonnes of copper, 1,269 ounces of gold and 9,878 ounces of silver in the second quarter to end-January.
In the second quarter, the company said it milled 54,869 dry metric tonnes of ore and produced 4,648 tonnes of copper concentrate containing 1,284 tonnes of copper metal, 1,269 ounces of gold and 9,878 ounces of silver. It said dry tonnes milled in the second quarter represented an 8% increase on the second quarter of 2013, but marked a 6% fall on the first quarter. Meanwhile production of copper concentrate in the quarter represented an 8% decrease on the first quarter.
"As previously announced, the company experienced a decline in head grades in January. With the recent fall in copper price and lower grades in January, the group has implemented a revised mine plan for the remainder of the fiscal year," the company said in a statement.
However, the company said that also when taking into account unrealised currency translation losses, its profitability will take a hit.
Rambler said that mine production was on target with its budget throughout November and December, but in January, the run of mine head grade was forecast to be 2.89% copper with 1.50 grammes per tonne gold, which did not turn out to be the case. Instead, the head grade for the month averaged 1.94% copper with 1.01 grammes per tonne gold, due to dilution control issues in selected production areas. As a result of this decline in grade the group implemented a revised mine plan for the remainder of the fiscal year.
"The lower grades discussed in January coupled with the declining copper prices experienced during the quarter has impacted our profitability. The operation has been making steady progress through the revised 2015 fiscal mine plan," said Chief Executive Norman Williams in the statement.
The company said its first-half production results were within its guidance, while it remains on target to meet the lower end of its annual production forecast. It said the operation is currently meeting its monthly development targets.
"Thus far in third quarter, run of mine copper grade has averaged 2.96% copper, and operating cash flow for the quarter is expected to be positive," the company said.
Rambler shares were trading 4.4% lower Monday morning at 14.10 pence.
By Rowena Harris-Doughty; rowenaharrisdoughty@alliancenews.com; @rharrisdoughty
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