LONDON (Alliance News) - Rambler Metals and Mining PLC Thursday said it swung to a pretax loss in the first half of the financial year after it was hit by higher production costs in the second quarter and production, head grades and copper prices fell, but it said it is on target to meet its full year production targets.
The miner focused on its Ming copper-gold mine in Canada swung to a pretax loss of CAD5.5 million in the six months ended January 31, from a CAD6.8 million profit a year earlier, as a combination of lower production and the fall in copper prices meant revenue declined to CAD22.8 million, from CAD32.0 million.
It also booked a CAD2.6 million loss on derivative financial instruments in the first half, compared with a CAD395,000 gain a year earlier and a wider loss on foreign exchange of CAD2.9 million compared with a CAD1.5 million loss. All of these were mainly experienced in the second quarter.
"The reduction in profits is due to the fall in accountable copper metal resulting largely from lower copper head grade in January, unrealised exchange losses on the translation of the gold loan and losses on the concentrate receivable derivative financial instrument due to the fall in copper price during the (second) quarter," said Chairman George Ogilvie.
"Operationally, it was a challenging (second) quarter and the board notes that the dip in copper price has impacted copper producers globally, with measures being taken to reduce costs industry wide," said Ogilvie.
In the first half, the company milled 113,415 dry tonnes of ore with a 97% copper recovery rate with a copper head grade of 2.78%, which is currently on course to meet the company's full year guidance.
For the whole of the 2015 financial year, the company is aiming to process between 215,000 to 230,000 tonnes of ore at a copper recovery rate between 94% to 96% with a copper head grade between 2.5% to 3.5%.
Rambler produced 9,720 dry metric tonnes of copper concentrate in the first half with an average copper recovery rate of 28.09% and 2,730 tonnes of copper metal. This is also on target to achieve the company's full year guidance of between 20,000 to 24,000 dry metric tonnes of copper concentrate at a recovery rate of between 27% to 30% alongside producing between 5,400 to 6,700 tonnes of copper metal.
In the second quarter, Rambler produced 5,005 dry metric tonnes of copper compared with 5,134 dry metric tonnes in the first quarter. Average copper concentrate prices fell to CAD3.39 per pound in the second quarter from CAD3.44, whilst gold prices rose to CAD1,415 per ounce from CAD1,387 per ounce in the first quarter. Silver prices fell in the second quarter compared with the first.
Average production costs in the second quarter rose to CAD162 per tonne of ore milled from CAD111 in the first quarter, whilst it cost the company CAD2.61 per equivalent pound of copper compared with CAD1.70 per pound.
As a result, the company implemented cost cutting measures and a revised mine plan for the Ming Mine for the remainder of the financial year, which it said gives it confidence it will meet its full year production guidance.
"Production was on target and on budget throughout November and December. However the company did encounter some dilution control issues in production areas during the final month of the quarter," said President and Chief Executive Norman Williams. "The unplanned dilution resulted in an 11% reduction in tonnes of copper produced when comparing this quarter to the previous. To counteract this we implemented a revised plan and announced cost cutting measures throughout the entire operation to ensure the company remains in a stable cash position moving forward."
At the end of January, Rambler reported a cash balance of CAD6.2 million, stronger than the balance of CAD4.5 million it had a year earlier.
The company is currently working on bringing the lower footwall zone at the Ming Mine into its mineral reserve, whilst also testing a mineral separation technique called dense media separation, that will optimise its operations and enhance production.
"The pre-feasibility study on the lower footwall zone will enable us to provide an updated reserve estimate for the project while the dense media separation technology may enable further optimisation of the assets and enhance production," said Williams.
Rambler shares were down 4.8% to 10.95 pence per share on Thursday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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