29th Apr 2016 12:24
LONDON (Alliance News) - Asa Resource Group PLC on Friday said that even though commodity prices rebounded in the fourth quarter of its financial year, the overall business environment was still "tough and challenging".
Ongoing improvements put in place by management have been taking effect, according to Executive Chairman Yat Hoi Ning, who said the steps are helping the businesses to recover.
At Asa's 74.73%-owned Zimbabwe subsidiary Bindura Nickel Corp, the financial condition improved "rapidly" in the three months ended March 31, the executive chairman said, mainly due to "massive growth" in nickel sales and production, both over 40% higher than the figures in the last quarter.
"Our cost control measures have resulted in the C1 and C3 costs being further reduced by nearly USD700/t and USD1,800/t respectively since last quarter ended December 2015. It is the first time that the realised nickel sale price is above the all-in sustaining cost (C3) in the past several quarters, regardless of market fluctuation in Nickle price. The nickel head grade has increased by 29% over the past quarter, mainly due to our strategic prioritization of accessing the higher grade ores and also due to upgrading and justifying the mining technology," Yat Hoi Ning said.
At the Freda Rebecca gold mine, the fourth quarter, from January to March, is the traditional off-season for gold sales. The chairman said that the result was that sales dropped by 24% in the fourth quarter versus the previous three-month period. However, he said the sales volume of the quarter was 5% higher than that in the corresponding three months a year earlier.
At Klipspringer, the diamond sale price was increased by USD3.77/ct in the fourth quarter, the chairman said.
Yat Hoi Ning said results in March 2016 were promising and encouraging.
"Our management team in Trojan has been making a considerable effort in reversing the losses in the operation" he said.
In the fourth quarter, he said, "this hard work has started to pay off and we successfully controlled the All-in Sustaining Cost (C3) well below the average realised sale price. That is a great signal for our Nickel production in terms of the profitability."
"It is expected that the target for the fourth quarter will be met due primarily to operational improvements which will result in reduced underground power interruptions, resolution of compressed air shortages and increased access to dump trucks, enhancing the development pace and hence increased access to high grade ore," he said.
At Freda Rebecca in March 2016, both sale and production for gold mining decreased due to the fourth-quarter being the off-season, making quarter-on-quarter comparison. Taking off the seasonal effect, the sale and production in Q4 FY2016 were higher than the sale and production in Q4 FY2015. The All-in sustaining cost (C3) of USD1,250/oz, almost matched with the realised sale price (USD1,210/oz), indicating that we are close to the break-even level, even off-season. That was unimaginable in the past," the chairman said.
Shares in Asa were down 6.9% at 0.745 pence Friday.
By Samuel Agini; [email protected]; @samuelagini
Copyright 2016 Alliance News Limited. All Rights Reserved.