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Finders assures that it’s all downhill now for Indonesian copper project
Mining
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ASX-listed copper miner Finders Resources believes the production disruptions that plagued its Wetar copper project in Indonesia in the latter half of 2017 are in the rearview mirror.
The news failed to excite investors, with the share price remaining unchanged at 24c on Tuesday.
The nameplate capacity of the mine, which is 74.1 per cent owned by Finders (ASX:FND), is 28,000 tonnes of copper cathode per annum, meaning it would need to produce 7,000 tonnes a quarter to meet that target.
However, production dropped from 6,804 tonnes in the June quarter to an estimated 4,100 tonnes in the December quarter, while costs rose from US$1.33 ($1.70) per pound to a forecast range of US$1.40 to US$1.80 per pound.
This will cost Finders between US$7.5 million and US$17.5 million in lost EBITDA for the December quarter. The company predicts its EBITDA will be closer to the lower end of its US$5 million to US$15 million range.
Production was impacted by a “crud run event”, crushing and stacking of rehandle material and a crusher breakdown.
But solution inventories are now continuing to rise steadily with an increased supply of fresh ore to the leach pads.
“With the temporary production interruption which occurred in the September and December quarters now behind us, we look forward to returning to the previous production levels, continuing to pay down debt and growing shareholder value,” boss Barry Cahill told investors.
“The current strong copper price will further assist this.”
The copper price has rallied 32.3 per cent over the past year to around US$3.28 per pound.
There is a renewed interest in the red metal given the growing market for electric vehicles, power storage and other clean energy technologies.
Electric vehicles contain up to 80 kilograms of copper compared to 20 kilograms in conventional internal combustion engines.
Due to the production issues at Wetar, Finders has had to renegotiate the repayment schedule for the US$145 million project loan.
The company has paid US$84.5 million off the facility in the past 18 months. A further US$9 million was paid at the end of December, reducing net project debt to US$51.5 million.
Finders’ production problems at Wetar has made it the target of a hostile takeover by major shareholder Eastern Field Developments.
Eastern Field — which comprises Provident Minerals, Indonesian investment firm Saratoga and Indonesian copper-gold miner Merdeka — tabled its 23-cent-per-share off-market offer in October.
The suitor, which has so far increased its stake in Finders to 24.86 per cent from 19.8 per cent, has flagged concerns over the production and cost downgrades and is demanding answers from Finders.
