3rd Feb 2016 11:44
LONDON (Alliance News) - Xtract Resources PLC Wednesday said it managed to increase profit in the final quarter of its financial year despite a steep drop in revenue, but conceded the profit was below its expectations.
The miner of the Chepica gold and copper mine in Chile said profit in the fourth quarter of 2015 rose 39% quarter-on-quarter to USD208,269 from USD150,112 despite reporting a 16% decline in revenue to USD375,802 from USD448,112.
A significant 44% quarter-on-quarter reduction in costs helped profit rise despite the revenue drop, but the fourth quarter results were still significantly below Xtract's original plan.
Xtract said it was targeting revenue of USD831,580 in the quarter and a profit of USD361,121 - 55% and 42% higher than what it has achieved respectively - as substantially lower than expected grades in the period offset a better than expected throughput of ore.
"The company's revenues did not meet target due to the mill grade being over 40% lower than anticipated, despite the underground development grades running at over 3.0 grammes per tonne. We are planning to install additional rougher cells to address this problem. This gold is not lost and we expect to recover it in the second and third quarters of 2016," said Chief Executive Jan Nelson.
Xtract's biggest challenge at its Chepica gold mine has been delivering on production targets as the mine lacks flexibility because the company can only access the mine from one point. Xtract said it has now addressed the volume problem and has been able to build up a significant stockpile of ore, which can be utilised as back-up to ensure volume throughput can be maintained at the processing plant.
Authorities shutdown the processing plant in late 2015 after two of Xtract's employees died following accidents on Christmas Eve. Xtract has completed all the work required to get the plant back up and running, but authorities have been delaying a visit to the site to confirm the plant is safe to resume operations.
Xtract said it has been assured authorities will visit the site Wednesday, and is hoping the plant can resume operations imminently. Xtract originally said the plant would be back up and running by January 20 at the latest.
Xtract shares were down 14% to 0.185 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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