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Mining
A bit of calm before the storm today as the market cools off from BHP’s (ASX:BHP) nickel dump with a light reporting day before all hell breaks loose this arvo.
Rio Tinto (ASX:RIO) is up in mere moments before MinRes (ASX:MIN), IGO (ASX:IGO), Pilbara Minerals (ASX:PLS), Northern Star Resources (ASX:NST) and Fortescue (ASX:FMG) report over the following 24 hours in an avalanche of data from our roster of monstars.
Before our writers retire with carpal tunnel syndrome, today has provided a bit of fresh air to log the achievements of some of the market’s unsung heroes and sad cases.
On the winner’s list is Mt Gibson Iron (ASX:MGX).
Yeah, its share price is down almost 5% on the back of a savage trading day for iron ore yesterday, falling nearly 5% to a touch over US$120/t.
But the underlying business has had a good six months, setting up a potential dividend payment to patient investors in August this year.
MGX increased net profit after tax from $7.4m in the same period in 2023 to $138.7m for the first half of FY24. That includes $35.9m in pre-tax gains on the sale of its Mid-West assets to Fenix Resources (ASX:FEX).
But it also reflects record performance at the high grade Koolan Island mine, shipping 2.5Mt of 65.4% Fe.
Those grades are only really seen elsewhere in the DSO market from Brazilian miners and – soon – Guinea’s Simandou mine.
MGX generated some $432m in FOB revenue, up from $152m a year earlier, its cash balance up a whopping $196.1m in the December half to $358.5m. MGX expects to sell 3.8-4.2Mt of iron ore this financial year at a cash cost of $65-70/t (excluding royalties and capex).
“Mount Gibson’s results for the first half of the 2023/24 financial year reflect a solid operating performance at the high grade Koolan Island mine, resulting in record six-monthly shipments and enabling Mount Gibson to rapidly rebuild its cash and investment reserves,” MGX CEO Peter Kerr said.
“The Company and its shareholders have benefitted from the substantial overburden stripping and processing facility investments made at Koolan Island over the last few years, such that the operation is performing well at a time of attractive iron ore prices, with the Company positioned for further cashflow generation.
“Koolan Island is Australia’s highest grade direct shipping hematite iron ore mine which provides a strong technical and economic base from which Mount Gibson can pursue future resources investment opportunities.”
But it’s not all sunshine and rainbows.
Ask First Quantum Minerals, the TSX base metals giant which is staring at some hefty losses thanks to the closure of its Cobre Panama mine in the Latin American nation.
FQM produced 707,679t at costs of US$1.82/lb, down 9% on the 2022 due to lower output at Kansanshi and the aforementioned drama around Panama.
That saw gross profit from operations of US$87m in the December quarter with copper output down 28% to 160,200t – down from US$660m in the three months to September 30 — as FQM ate a US$1.447b loss in the quarter and US$954m loss in the full year for 2023.
It had generated positive earnings of US$1.034b in 2022.
Cobre Panama produced 330,863t in what looks like it will be the mine’s last full year in operation, with Kansanshi and Sentinel contributing 134,827t and 214,046t respectively.
Ravensthorpe, the nickel mine in Australia where FQM and partner POSCO elected to curtail operations by halting mining for 18 months in January, lost US$108m in the December quarter, producing each tonne of nickel at total costs of US$14.18/lb.
Average nickel prices received clocked in at just US$7.53/lb.
FQM, which is planning to sell smaller mines and minority stakes in assets to counteract the impact of Cobre Panama’s early end, will produce 370,000-420,000t of copper, 95,000-115,000oz gold and 22,000-37,000t of nickel in 2024, rising to 400-460,000t Cu, 120-140,000oz Au and 26-41,000t Ni in 2025 and 400-460,000t Cu, 140-165,000oz Au and 36,000-51,000t Ni in 2026.
12,000-17,000t will come from Ravy in 2024, falling to 11,000-16,000t in 2025 and 2026.
All in sustaining costs for nickel – including Ravensthorpe and the Enterprise project in Zambia – are expected to drop to US$8.40-10.40/lb this year, then US$7.70-9.70/lb in 2025 and US$6.50-7.80/lb in 2026.
In Australia, St Barbara (ASX:SBM) reported an underlying net loss after tax of $27.3m, including an operating loss of $11m and $6.7m to transition its Touquoy mine in Nova Scotia into care and maintenance.
Depreciation, redundancies and provisions against the gold in circuit at Touquoy brought losses for the former owner of the Gwalia gold mine to $42.7m.
But it has $214m cash and $26.1m in listed investments on hand after the sale of Gwalia to Genesis Minerals (ASX:GMD).
SBM produced 23,348oz at the Simberi mine in PNG and 6480oz at the Atlantic Gold Operations in Nova Scotia, pinning its longer term hopes on the development of new orebodies at Atlantic and an expansion project at Simberi.
While miners are feeling the pinch from inflationary pressure and commodity prices, the ASX’s mining services sector is in a rich vein of form.
The latest reporting success story is Lycopodium (ASX:LYL), which made a motser working on projects in Africa, Australia and Asia.
The plant feasibility and construction experts saw revenue lift from $159.9m in H1 FY23 to $177.8m in H1 FY24, with EBITDA rising from $32.2m to $43.6m.
That saw NPAT lift 50% to $30m, supporting a fully franked interim dividend of 37c.
LYL, which was up 8.8% at 3.30pm AEDT, expects to hit full year revenue guidance of $345m in FY24, with NPAT of $46-50m.
It came on a generally tough day for materials stocks, with sliding iron ore prices leading the sector to a 1.49% fall as of 3.30pm AEDT.
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