Contrasting quarterly reports this week from three of the country’s mid-range miners – IGO in nickel, Gold Road and St Barbara in gold.
The latter two confirming previously revealed reported problems in their WA gold mines while IGO though rode the rebound in nickel very smartly while hopping onto lithium in a big, big way.
In fact, IGO beat its production target at its Nova nickel-copper-cobalt operation in Western Australia following higher feed grades and recoveries.
The Nova mine produced 7,887 tonnes of nickel and 3,538 tonnes of copper in the three months to June, boosting output for the full year to 29,002 tonnes of nickel, a bare margin above its 29,000-tonne guidance.
The copper performance was stronger – the company produced 13,022 tonnes of copper for the 2020-21 year, easily surpassing its 11,000-to-12,500-tonne guidance which saw the company take advantage of the sharp rise in global prices for the metal in the year to June (similar to what Newcrest and OZ Minerals managed to achieve).
Sales revenue for the Nova operation was $225.5 million compared to $131.4 million in the previous quarter due to higher production and stronger metals prices. That saw group revenue for the quarter jump to $266 million.
Group revenue for the year to June jumped to $921 million, with underlying earnings before interest tax depreciation and amortisation of $474.6 million. Net profit after tax was $587 million, the report revealed.
Group revenue in 2019-20 was $892.4 million, underlying EBITDA was $459.6 million and net after tax profit was $155.1 million.
IGO said that total cash (and net cash) at the end of June 2021 was $528.5 million, a decrease of $767.4M million during the Quarter.
Significant cash movements during the quarter included the completion payment for the Lithium Transaction ($1.763 billion), net cash receipts of $862.3 million for the proceeds from the Tropicana mine sale, and strong operating cash flows of $133.3 million.
The Company retains undrawn debt facilities of $450 million.
IGO CEO Peter Bradford was upbeat in his commentary.
“Performance from Nova has continued to impress, with full year production ahead of guidance for all metals, while cash costs finished the 2021 financial year at the lower end of the updated guidance range, which we adjusted lower during at the March 2021 quarter,” he said.
“This has resulted in record free cash flow generation from Nova of $393 million for the year – an outstanding result.”
IGO finalised its divestment of the Tropicana operation in Western Australia during the June quarter. That was used to finance the move to become a global player in lithium.
“The repositioning of our portfolio was completed during the June 2021 quarter, with both the Tropicana divestment and lithium transaction with Tianqi reaching financial close,” Mr Bradford said.
IGO owns 51% of the Tianqi JV and will give the company a 51% stake in the Greenbushes lithium mine in southwestern Western Australia, and a 100% owned and operated interest in the Kwinana lithium hydroxide refinery.
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Meanwhile Gold Road Resources had already revealed problems with its Gruyere mine owned in a joint venture with Gold Fields and on Wednesday it confirmed the impact on its 2021 financial year.
Gold Road reported lower gold production for the June quarter in the wake of the processing plant issues at the Gruyere joint venture (JV) operation in Western Australia last month.
Gruyere produced 53,132 ounces of gold on a 100% basis during the June quarter, down from 66,213 ounces in the March quarter.
In the June quarter, IGO said Gruyere’s processing plant suffered a torn mill feed conveyor belt, causing temporary repairs and lower processing rates. This in turn caused the milling circuit to be shut down while personnel and materials for the belt replacement were sourced.
After replacing the conveyor belt, Gruyere’s ball mill failed forcing processing to continue at a lower rate leaving only the semi-autogenous grinding (SAG) in operation.
Gold Road says the ball mill repairs were completed on June 25 with the processing plant returning to its normal operations at the end of that month.
The mine’s all-in sustaining cost (AISC) of $1,659 an ounce for the quarter was was slightly better than expected after the processing plant shutdown at Gruyere in June. This however was still much higher than the March quarter’s AISC of $1,386 an ounce.
The company sold 28,425 ounces in the June quarter at an average price of $2,145 per ounce, which included 10,300 ounces at $1,823 per ounce into forward sales contracts.
“Despite the impact to 2021 guidance, Gold Road remains confident in lifting throughput and grades to deliver increasing production in 2022 and 2023 per the three-year guidance issued in February 2021,” Gold Road said in Wednesday’s statement.
Gold Road had cash and equivalents of $128.6 million at June 30 March quarter: $149.8 million) and no debt drawn.
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Gold miner St Barbara disappointed with its 2021-22 outlook following a disappointing June quarter and full year report yesterday, with no real rise in production forecast and a rise in costs.
St Barbara’s three mines produced 82,698 ounces of gold in the quarter, down sharply from 109,000 in the same quarter last year.
That saw full financial year production of 327,662 ounces and All-In Sustaining Cost (ASIC) of $1,616 an ounce.
St Barbara forecast group gold production 305,000 – 355,000 ounces for 2021-22 at an AISC $1,710 – $1,860 per ounce
Production at the Simberi Mine in Papua New Guinea was lower after production was halted following a fatal accident – a safety berm broke and a truck plunged into an open pit, killing the driver. And a landslide damaged the Deep-Sea Tailings Placement pipeline.
Total cash at bank on June 30 was $133 million (March 31: $92 million), after the repayment of debt of $21 million during the quarter. Total debt owing under the Company’s syndicated facility on June 30 was $82 million (March 31 $102 million).
