Mandaluyong—(PHStocks)—Atlas Consolidated Mining and Development Corp. (PSE: AT) reported revenues of PhP12.6 billion during the first nine months of the year, 15% higher versus the same period last year, driven mainly by the increase in revenues from copper, gold and nickel. Revenues increased despite lower realized copper and gold prices as sales volume remained resilient with copper, gold and nickel output accelerating by 12%, 18% and 41%, respectively.
Atlas Mining’s wholly-owned subsidiary, Carmen Copper Corp., sustained its production ramp-up after the commissioning of the expanded processing plant in March this year, with a third quarter production of 27.9 million pounds of copper metal in concentrate. This brings year-to-date production to 81.4 million pounds of copper metal in concentrate, which translates into an 18% increase from the same period last year.
As it continues to improve the process flow of its expanded plant, Carmen Copper registered its highest average daily milling throughput in July at 57,000 tonnes per day reaching its expanded nameplate milling capacity of 60,000 tonnes per day for the most part of the month of July. The unusually higher levels of rainfall during the 3rd quarter required a change in the mine plan sometime in August that moved most mining operations to the higher benches as a safety precautionary measure. With the change in the mine plan which affected the grades and ore output, management decided to also catch up with regular maintenance work including those scheduled for the first quarter of 2015.
With improved production, total volume of copper shipments increased by 15% to 78.1 million pounds of copper metal in concentrate, while gold content was up by 25%. However, the revenue impact of increased shipment volume was tempered by the lower realized prices of copper and gold. Copper prices were down 5%, hovering at an average of $3.16 per pound, while gold dropped by 10% to $1,290 per ounce. Had the copper and gold prices remained at last year’s level, additional revenues of about PhP630 million should have been realized this year.
Due to the higher level of production and shipments, total operating cash costs rose by 25% to PhP8.09 billion. Nevertheless, operating efficiency was sustained as average cash cost per pound of copper increased by only 13% from $1.66/lb to $1.86/lb, which is attributable mostly to higher smelting fees and higher accounting charges for waste stripping to align with the average waste-toore ratio over the life of the mine. Total cost also increased by 10% from $2.42/lb to $2.67/lb with higher depreciation and financing charges in 2014.
Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) increased by only 3% to PhP4.7 billion as the decreases in copper and gold prices offset the increases in shipment volume. Atlas Mining’s performance in the first three quarters got a boost from its nickel subsidiary Berong Nickel Corp. (BNC), which grew its net income sixteen-fold to PhP471 million. BNC’s production volume spiked, growing almost double to 1.1 million wet metric tons, while shipments surged 74% resulting in a significant increase in revenues to PhP2 billion.
While EBITDA was sustained on account of increasing volume, net income narrowed to PhP841 million in the first nine months due to higher depreciation and financing charges, and higher income tax provision this year on account of the expiration of the income tax holiday incentive of Carmen Copper in October 2013. Financing charges increased this year as a portion of the financing costs was capitalized during the construction phase of the expansion project last year.
According to Atlas Mining Executive Vice President Adrian Ramos, “We are confident that we have positioned the company for a solid performance in 2015 and the coming years with the completion and commissioning of Carmen Copper’s processing plant and the transition to the higher grade-orebody. We commissioned the processing plant in March and have finally confirmed its nameplate capacity of 60,000 tons per day in July. Pre-stripping of the Carmen open pit mine which contains higher-grade-ore has advanced to a stage that will enable 100% ore feed from the Carmen orebody by January 2015. For the rest of the year, we have decided to focus on addressing process flow efficiency enhancements and to perform key regular maintenance work in our thrust to achieve the optimal throughput needed to further increase earnings and bring down cash costs next year. While this will affect our net income guidance this year, Atlas Mining is well prepared for 2015 where we expect to realize the full benefits of the expansion projects.”