More mixed news from the bottom end of the listed miners, despite that rise in world gold prices yesterday.
Shares in Ramelius Resources (RMS) jumped nearly 24% yesterday after the small hold miner revealed an encouraging rise in June quarter gold production.
The shares jumped 23.8% or 2.5c to 13c after it told the ASX that production at its Mt Magnet gold mine in central Western Australia was 17,100 ounces, up 17.5% on the March quarter.
RMS 1Y – Ramelius shares up yesterday, but it’s also cost cutting
But like so many of it’s peers, that rise in output (which was hit by the plunge in gold prices in the quarter) hasn’t bee enough to prevent the company from starting a cost cutting purge.
Ramelius told the ASX it was "currently undertaking a review of capital and operational costs for the current year to ensure the project is cash-flow positive in the current gold price environment."
At the end of June, the company had cash and gold on hand of $37.4 million also had securities for sale of $3 million.
And Metallica Minerals (MLM) says it is pulling its horns in and cutting spending to all but essentials as it seeks to try and ride out the sharp downturn in mining and the slide in commodity prices. It’s not alone, as we are now seeing from more and more companies.
It revealed it had around $11 million in listed investments and cash and a tax rebate (and no debt) which it will use to try and keep things ticking over while the slowdown passes.
The company told the ASX yesterday afternoon in an update that it was "adapting to current market conditions by implementing reduced project activities including deferring the proposed SCONI Definitive Feasibility Study".
(That’s the scandium-cobalt-nickel project northwest of Townsville in North Queensland which is supposed to be its best project along with the Weipa beach sands project, on western Cape York.)
"At this time, in the current major down turn in the resources sector, the directors believe it is prudent to significantly reduce project, corporate and administration expenditure to preserve cash and maintain its core project assets – SCONI and Weipa.
"The value of Metallica’s combined and listed investments is approximately $8.4 million (and no debt) as at 30 June 2013. This should be boosted with a $3 million R&D rebate. Metallica also has the added security of approximately $5.4 million worth of listed ASX investments."
And, Managing Director Andrew Gillies said in the statement.
“Metallica is well placed to move its two core projects to the development stage and has completed a substantial amount of technical work to date, such that there is a high degree of confidence in development potential.
"The SCONI Project is a unique project that requires strategic partners to fully implement a new and exciting critical metal market, scandium, this takes time and business confidence.
"By deferring any new major initiatives, the Company seeks to be mindful of preserving its important cash position and maintaining shareholder value, through continued efforts to complete necessary permitting and to develop important relationships with interested parties for offtake and project participation.”
"After due consideration of the weakness in current and expected market and business conditions, the sustained difficulty in attracting sufficient project funding, or strategic investor partnerships and the general weakness of equity markets, the Board of Metallica has decided that it is prudent to reduce non-essential project expenditure to conserve cash.
"The Board will revisit this decision once it has secured further funding.
"While the Board of Metallica has taken this considered decision in order to conserve cash, Metallica is continuing to pursue and explore project funding opportunities for its SCONI and Weipa projects, which includes identifying strategic investors.
"It should be noted that the majority of the field work required for the feasibility into the development for both the SCONI project and the Weipa heavy mineral sands (HMS) project, has already been completed.
"The Company has also completed a significant amount of necessary testwork and engineering on both projects, and has a high level of confidence as to the technical viability of these two projects. The Company will continue actively progressing permitting of its key mining lease applications towards their grant."
Metallica shares eased half a cent to 9c yesterday.
MLM YTD – Metallica Turns Down The Volume
