4th May 2016 09:58
LONDON (Alliance News) - Xtract Resources PLC shares fell on Wednesday after it said the plant at the Chpeica gold mine in Chile was only producing for one of the first three months of 2016, forcing the company into the red in the period as revenue dropped and costs rose.
Xtract shares were down 8.1% to 0.193 pence per share on Wednesday morning.
The company said it made a USD18,440 loss in the first quarter of 2016 compared to the USD208,269 profit booked in the fourth quarter of 2015 as revenue declined 38% to USD230,663 from USD375,802.
According to Xtract's original plan for the first quarter of this year, the company was expecting to make revenue of USD550,000 and a profit of USD350,000, but the stoppage of the plant at the mine made these targets infeasible.
The reason revenue fell was because the plant at Chepica underwent a period of cold commissioning and was only producing concentrates in March, meaning revenue was only coming in the door for a third of the quarter.
The plant at Chepica was shut down by authorities in late 2015 following the death of two Xtract employees in accidents that occurred on Christmas Eve.
The company was originally hoping to restart operations on January 20, but visits from authorities were pushed back and the plant was only given permission to restart in early February.
Although operations restarted on February 4, production did not ramp up until March despite Xtract stating it would only take a few days to get back up to full capacity.
However, costs were still flowing out of the business throughout the quarter, and rose 48% from the previous period to USD249,103 from USD167,533 - making operations unprofitable across the first three months of the year.
"Unfortunately the processing plant was down for almost two months of the three months as a result of the fatalities in the plant in late December 2015. A total of just over 11,000 tonnes was milled in March - almost equal to all the volume milled in the fourth quarter of 2015 - and the mine is therefore expected to mill 30,000 tonnes in the second quarter of 2016," said Chief Executive Jan Nelson.
By Joshua Warner; [email protected]; @JoshAlliance
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