25th Aug 2015 08:31
LONDON (Alliance News) - Mwana Africa PLC on Tuesday said its gold operation remains profitable despite being hampered by the fall in gold prices, but said its nickel operation was not profitable in the last quarter as production and prices fell and costs rose.
The pan-African, multi-commodity mining and development company said production from the gold Freda Rebecca mine in Zimbabwe produced 16,985 ounces in the first quarter of the financial year ended June 30, rising from 13,443 ounces in the immediate previous quarter.
That was due to the rise in the mill's average feed grade, which increased 11% quarter-on-quarter to 2.03 grammes of gold per tonne compared to 1.81 grammes.
Alongside the increase in production, Mwana said its cash costs at the mine fell by 25% quarter-on-quarter to USD930 per ounce from USD1,234 per ounce because of the increased production and a small 5% fall in operating costs.
All-in sustaining costs were down 24% quarter-on-quarter to USD1,093 per ounce from USD1,429 per ounce.
To put that into perspective, Mwana achieved an average gold price of USD1,186 per ounce in the quarter, down 3% from the previous quarter when it achieved a price of USD1,223 per ounce.
"The past quarter has not been without its challenges, but I am pleased to say that they have been addressed progressively and appropriately. Our main challenges have been external, particularly those of falling commodity prices," said Mwana.
"The mine remains operationally profitable and will be maintained in that state," it added.
At the Trojan nickel mine in Zimbabwe, the company said it produced 1,349 tonnes of nickel in concentrate, which was down 34% quarter-on-quarter from 2,032 tonnes as grades fell by 26%. That pushed nickel sales 39% lower quarter-on-quarter to 1,267 tonnes from 2,072 tonnes.
Alongside that was a 29% quarter-on-quarter rise in cash costs to USD8,901 per tonne from USD6,926 per tonne and all-in sustaining costs increasing 35% to USD9,736 per tonne from USD7,209 per tonne. Prices also dropped 11% to USD8,461 per tonne from USD9,489 per tonne, meaning its operation was loss making in the quarter ended June 30.
"During the quarter under review underground operations were affected by temporary poor availability of ore draw points which resulted in lower utilisation of equipment and increases in underground transport equipment. The result was slower mining rates, though these should improve sharply during the current quarter," said Mwana.
At the Kilspringer diamond mine in South Africa, Mwana said sales fell 45% quarter-on-quarter whilst fine diamond prices dropped 7%.
"At our Klipspringer diamond joint venture revenues were affected by the lower diamond prices that have been affecting all diamond producers. The processing plant, which recovers gems from old slimes tailings, suffered temporary technical problems which lowered production, but this is expected to be resolved in the current quarter," said the company.
In terms of exploration, the company said it completed field mapping in the Godawiza and Djalasega areas of the Zani-Kodo gold exploration project in the Democratic Republic of Congo. The company has now moved exploration activities to the Kepira and Kodo West areas where prospective lithologies and structures have been identified.
At the copper and cobalt joint venture exploration project in the Congo, fieldwork, including mapping, soil sampling and drilling, has been initiated by its joint-venture partner, Hailiang, on five priority target areas, it said.
Mwana shares were down 1.5% to 0.985 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
Mwana Africa