PAN African resources company Mwana Africa posted a net profit of $50.6 million in the financial year to March 31, 2014 after the reversal of $28 million impairment at Bindura Nickel Corporation.
In the prior year the group had recorded a $43.5 million loss.
Group revenues were up 30,5 percent to $142.5 million up from $109 million the prior financial year while earnings before interest, taxation, depreciation and amortisation spiked 40 percent to $25 million.
Attributable group net profit for the year of $36.6 million bounced back from a net loss of $28.6 million.
Gold sales at Freda Rebecca during the period under review amounted to 58,000 ounces with gold recoveries up to 82 percent from 81 percent in 2013.
BNC sold 7,129 tonnes of nickel during the same period as it forges ahead with restarting its smelter subject to funding, to produce nickel alloy.
Commenting on the results, chief executive officer Kalaa Mpinga said: “Despite some temporary setbacks at the beginning of the year, Mwana has made substantial progress in the past financial year – progress that has continued since the year’s end – and that has resulted in a significant strengthening of the company’s financial structure.”
Mpinga attributed the success to the resumption of sales of nickel in concentrates by BNC’s Trojan nickel mine in terms of an off-take agreement with Glencore.
“The significant cash-flow improvement that stemmed from higher nickel prices was complemented by solid production outcomes following the shift to mining the ore body’s higher-grade massives,” said Mpinga.
“Nickel prices have improved in response to Indonesia’s decision to restrict exports of nickel in ore, and while I am certain that the price will be volatile in the near term, we are expecting it to have strengthened by 2017.”
At the start of the past financial year Mpinga said the company contemplated having to ask shareholders for additional funding, but that changed due to improved cash flow from BNC that enabled the group to reverse $28m of the previous year’s $43,7m BNC assets impairment.
“Since the financial year’s end we have embarked on the project to restart BNC’s smelter (subject to securing funding) with the aim of starting production of nickel alloy in the first quarter of calendar 2015,” he added.
“Not only will this take the company up the value chain as better prices will more than offset the smelter’s operating costs, but we will have the benefit of the significantly lower cost of transporting nickel metal rather than concentrate to our export harbour.
He said the company’s strategy was to be self-financing or, where appropriate, to take in other partners or funding for specific projects.
Mwana said the current financial year is confidently expected to result in the company’s further financial strengthening.