Minara Resources Ltd is now Australia’s second largest nickel producer, having spent several years trying to recover from production and technical problems in Anaconda’s headlong rush to bring the Murrin Murrin lateritic nickel project into production when Twiggy Forrest was running the show.
Minara is now controlled by the Glencore commodities trading group of Switzerland, which is the major shareholder in the much bigger miner, Xstrata. Minara has 60% of Murrin Murrin and Glencore the remaining 40%.
The mining and processing operations have now settled down, the poor market conditions are the major hindrance, but Minara (MRE) isn’t alone in that area.
The company yesterday revealed a rise in fourth quarter output and said it continued to remain focused on cost-saving initiatives, as it was for all of last year.
Production during the three months to December 31 was up 30.2% compared with corresponding quarter of 2007,with 7,836 tonnes of nickel produced from Murrin Murrin. (Source)
Minara said it completed the transition to a new business plan during the quarter, resulting in lower operating costs, capital expenditure and workforce as nickel prices fell and global economic conditions worsened.
"The full impact of these cost reductions will be realised during 2009," the company said yesterday..
The company also completed a $210 million capital raising to repay short term debt and fund committed capital expenditure.
"I am pleased to report that the successful rights issue coupled with our new business plan and the actions we have taken in the last six months to reduce our costs has ensured Minara’s operations in difficult economic and market circumstances," Minara chief executive Peter Johnston said in the ASX statement.
Minara said that the nickel market continued to be volatile but that the company believed fundamentals remained sound over the medium to long-term.
The company said there had also been a sharp decline in the cost of sulphur during the quarter, which has been maintained into 2009 and is expected to have a positive impact on Minara’s operating costs.
Sulphur is a key input used in the processing of lateritic nickel ores.
The company said the nickel market "continues to be volatile with prices this quarter continuing the downward trend seen throughout 2008.
"Despite the current weak demand for all metals Minara believes the nickel market fundamentals remain sound over the medium to longer term. Whilst the cobalt price also declined during the quarter, it remains an important revenue stream for the company."
Mr Johnson said in the statement, "The rights issue was fully underwritten by our major shareholder, Glencore International AG. The importance of this underwriting should not be underestimated as it was crucial in a very tough financial market. Glencore’s shareholding in the company has increased to 70.6% and we welcome their continued support.
“We believe that the sulphur price having peaked in September 2008 is rapidly returning to historic levels. We closed out 2008 with an improving production profile, a strong balance sheet, no debt and strong cash reserves.”
Minara shares rose 1.5c to 32.5c yesterday.
