Nickel Asia Corp. (NAC, PSE:NIKL) has announced its unaudited financial and operating results for the three months ended March 31, 2020, with an attributable net loss (net of minority interest) of PhP89 million compared to a net income of PhP138 million reported during the same period last year. Despite the net loss, earnings before interest, tax, depreciation and amortization (EBITDA) amounted to PhP804 million, a 21 percent increase compared to PhP662 million in the prior year.
The loss in the first quarter was mainly due to a PhP261 million mark to market loss from the company’s portfolio investments, as the spread of COVID-19 profoundly affected markets globally. The said loss translates to a negative 5.6% overall return on the portfolio’s performance.
The company also reported a consolidated net loss of PhP10 million from its equity investments in Coral Bay Nickel Corp. and Taganito HPAL Nickel Corp., slightly lower compared to the PhP25 million net loss in the same period last year.
Despite the worldwide disruption created by the COVID-19 pandemic, ore shipments remained at similar levels during the two comparable periods. The company sold an aggregate 2.78 million wet metric tons (WMT) of nickel ore during the first quarter of the year as against 2.89 million WMT in the previous year. It was the impact of higher ore prices during the first quarter which led to total revenues increasing by 11 percent to PhP2.21 billion from PhP2 billion last year.
The company realized an average price of $5.80 per pound of payable nickel on its shipment of ore to the two HPAL plants, the prices of which are linked to the LME. This compares to an average price of $5.56 per pound of payable nickel sold in 2019. With respect to export sales, the company achieved an average price of $28.58 per WMT compared to $19.71 realized in the prior year. On a combined basis, the average price received for sales of both ore exports and ore deliveries to the two plants in 2020 was $12.95 per WMT, higher than the $10.81 achieved in 2019.
Total operating cash costs decreased by 10% year-on-year to PhP1.41 billion from PhP1.57 billion in 2019. On a per WMT sold basis, total operation cash costs decreased to PhP505 per WMT compared to PhP542 per WMT in 2019.
“If we strip-out the mark to market loss from the portfolio investments and, at the same time, take into account the challenges of Covid-19, earnings from the company’s operations actually improved year-on-year as evidenced by a higher EBITDA. In spite of this, we remain cautious for the rest of the year owing to the uncertainties prevailing in markets globally,” said Martin Antonio G. Zamora, President and CEO. “We also wish to announce that our Taganito and Taganaan mines have re-started operations this month, albeit gradually, following almost one month of voluntary suspension.”