Lateritic nickel producer Minara Resources, controlled by the huge Glencore commodity trading group of Switzerland, yesterday reported a turnaround to profit for the first half of the 2010 financial year.
The company told the ASX that first half net profit was $39.316 million for the six months to June 30.
That followed a loss of $3.05 million in the first six months of 2009, and a profit of $48.5 million for all of the 2009 year
Revenue for the first six months of 2010 was $233.74 million, up 23% from $190.11 in the first half of last year.
Production at Murrin Murrin in Western Australia fell during the half year to 14,512 tonnes of nickel packaged and 1,008 tonnes of cobalt packaged, due to a pipeline failure caused by a steam collapse on May 25, 2010.
Minara says direct cash costs for the half year increased to $US5.76 per pound (lb) nickel, due to the pipeline failure, compounded by the cost of rectification and modification works.
Minara Resources, which owns 60% of the Murrin Murrin Nickel/Cobalt project in WA (Glencore owns the other 40%), warned that the nickel and cobalt markets remain volatile.
"During the half-year period the nickel LME (London Metal Exchange) cash settlement price ranged from a low of US$17,035 per tonne to a high of US$27,600 per tonne," the company said in yesterday’s statement.
"The cobalt price (99.3 per cent LMB) has also varied. During the half-year period it ranged from a low of US$17.10 per lb to a high of US$21.75 per lb."
During the half year, Minara announced the return of $111 million capital to shareholders at 9.5c per share.
"The $111 million return of capital to eligible shareholders reflects the board’s confidence in our financial position," chief executive Peter Johnston said.
"It is pleasing we were able to undertake this return of capital and maintain strong cash reserves."
Mr Johnston said the purchase of Crescent Gold’s Mt Lucky tenements near Laverton would provide Minara with a reliable source of manganese and enable the company to process additional nickel-sulphide feeds.
"Minara’s focus is to complete our statutory maintenance shutdown in October and then consolidate a steady production profile at Murrin Murrin," he said in a statement.
Minara says it had cash on hand of $363 million at June 30 and remains debt free.
"The Murrin Murrin production guidance for the 2010 calendar year remains unchanged and is at the lower end of 30,000 – 34,000 tonnes of nickel (Minara’s share 60%).
"This guidance takes into account the impact of the pipeline failure and the budgeted triennial major plant shut scheduled for October 2010.
"Minara’s sales position remains unhedged in both currency and price," the company said.
The company has not declared a dividend for the first half.
Minara shares fell half a cent to 74c yesterday.
