Another resource company hinting at write-downs and losses next month is copper miner PanAust (PNA) which yesterday also topped market analyst forecasts for its December quarter and its own full year guidance.
Like oil groups Beach and Oil Search which yesterday revealed a first round of spending cuts or impairments – and solid production and sales reports – Panaust told the market that more detail would be available on possible cuts and impairments when it reports its full financial figures next month.
But PanAust did warn that the book carrying values of some assets would have to be revisited on the back of the 24% decline in the copper price over the past year, much of which has come in January.
“In light of the accelerated deterioration in copper price in the latter half of 2014 and early 2015 and with a focus on development of the Frieda River Project, the carrying value of a number of exploration and advanced stage projects is under review as part of the 2014 year financial reporting audit process,” the company said in a statement to the ASX.
PanAust has two operating mines in Laos (Phu Kham and Ben Houayxai), a major development focus at Frieda River in Papua New Guinea and an asset in Chile called Inca D’oro.
In fact analysts say the Inca D’oro prospect is a good bet to be one of the assets facing a write-down given its increasingly marginal nature which includes a water shortage and a reluctant joint venture partner. In fact there was no work done at this prospect last year.
The company has already cut 182 jobs in the past two months and changed some jobs in Laos from ex-pats to cheaper locals, in response the lower copper price. These changes will eventually produce savings of $US15 million, according to the company.
PNA 1Y – PanAust hints at writedowns
PanAust said full‐year copper in concentrate production rose 10% year‐on‐year to 71,155 tonnes (t) (guidance 65,000t to 70,000t). Production of gold in concentrate and doré totalled 168,755oz gold (guidance 160,000oz to 165,000oz) and silver totalled 1.3Moz (guidance 1.2Moz).
And 2015 guidance is for production of copper in concentrate of between 73,000t and 76,000t, and gold in concentrate and doré of between 175,000oz and 183,000oz. Silver in concentrate and doré is expected to be between 1.3Moz and 1.4Moz.
The company said that at the end of December it had: cash of US$74.9 million, following payment of an interim dividend to shareholders on 3 October 2014 totalling A$16.3 million and a US$20 million repayment of corporate debt facilities; debt of US$130.0 million (excluding equipment lease facilities); and undrawn debt facilities of US$145.0 million.
PanAust said that earnings before interest, tax, depreciation and amortisation (EBITDA) for the 2014 year were US$194.1 million (unaudited); the average realised copper price was US$3.05 a pound. It was just over $US2.46 a pound on Comex in New York on Wednesday.
PanAust shares rose nearly 6% to $1.28.
