Manila—(PHStocks)—Nickel Asia Corp. (NAC, PSE: NIKL) today announced its financial and operating results for the nine months ended September 30, 2016 with attributable net income (net of minority interests) at PhP980 million compared to PhP2.49 billion reported for the nine months ended September 30, 2015. Earnings before interest, tax, depreciation and amortization (EBITDA) amounted to PhP3.97 billion compared to PhP5.92 billion in the prior year.
The decline in earnings was primarily the result of lower ore prices and marginally lower volume of sales. Also contributing to the drop in earnings is the company’s share of the losses on its 22.5% equity interest in Taganito HPAL Nickel Corp. (THPAL) and a 10% equity interest in Coral Bay Nickel Corp. in the total amount of PhP561 million, accounted for under the equity method. The profitability of the two HPAL plants was affected by very low nickel prices realized during the period.
In a previous disclosure made on September 15, 2016, it will be recalled that the company announced the sale of 12.5% shareholdings in THPAL, out of its 22.5% equity interest, to Sumitomo Metal Mining Co. Ltd of Japan for a total consideration of $42 million. The actual recognition of said sale will take effect in the fourth quarter of 2016, following the execution of a Deed of Sale on October 17, 2016.
With respect to mining operations, the company sold an aggregate 15.2 million wet metric tons (WMT) of nickel ore in the first nine months as against 16 million WMT in the same period last year. The drop in shipment volumes was the result of a delayed start of shipments from its Hinatuan and Cagdianao mines due to the prolonged rainy season and resulting sea swells in northeastern Mindanao, where the two mines are located, and a temporary reduction in the deliveries of limonite ore to the Taganito HPAL plant in the second quarter, while the plant was undergoing remedial work over a one-month period.
Of the total volume of ore shipped, 5.67 million WMT was saprolite ore and 9.52 million WMT was limonite ore, which includes 5.44 million WMT delivered to both the Coral Bay and Taganito processing plants. This compares to 6.02 million WMT, 9.95 million WMT and 5.62 million WMT respectively, for the same period last year.
In terms of price, the Company realized an average of $4.19 per pound of payable nickel on its shipments of ore to the two HPAL plants during the first nine months of the year, the pricing of which is linked to the LME. This compares to an average price of $5.74 per pound of payable nickel sold during the same period last year. With respect to export sales, the company achieved an average price of $19.20 per WMT compared to $22.70 realized last year. On a combined basis, the average price received for sales of both saprolite and limonite ore in this first nine months was $13.97 per WMT, 18% lower than the prior year’s $17.10 per WMT.
Total operating cash costs decreased by 13% year-on-year to PhP6.07 billion from PhP7.01 billion in 2015. On a per WMT of ore sold, total operating cash costs decreased to PhP400 per WMT compared to PhP439 per WMT in 2015. The realized Peso / U.S. dollar exchange rate for ore sales during the first three quarters of the year was PhP46.88 compared to PhP45.14 during the same period last year.
“Our mining operations continued to be profitable despite very low LME nickel prices that during this nine month period averaged at a level not seen since about 13 years ago,” said Gerard H. Brimo, president and CEO of the company. “Nickel prices have started to improve in the 3rd quarter of the year due to a global supply deficit resulting from a steady rise in nickel demand, particularly in China, and production cutbacks by a number of high cost producers. We look forward to a continuing improvement in prices.”