BINDURA Nickel Corporation (BNC) revenue is forecast to grow to $98,6 million for the full year ending March 2015 from $65 million in 2014 on the back of improved higher head grade and cost reductions, local analysts have said.
In 2015, total nickel production is targeted at 8,920 tonnes as compared to 7,027 tonnes of nickel in concentrates which was recorded in 2014, ABC Stockbrokers said in a latest report. Profit before tax is expected to be at $34,9 million and profit after tax at $25,9 million.
ABC Stockbrokers said the full year performance for BNC will also depend on the average cost of power for the year anticipating that BNC would be able to negotiate for an average price inside 0,10 cents per kilowatt in line with the current model.
In the first quarter ended June 30 2014, BNC nickel production dropped by 14% on the back of a marginal 4% decline in tonnes mined and 3% decline in tonnes milled from first quarter last year.
Tonnes mined in first quarter ending June 30 2014, however, improved significantly by 35% compared to 2013 period, while tonnes milled were relatively flat due to millions of accumulated stocks on the same period last year.
“The cost of production is expected to drop once efficiency levels are restored at the re-commissioning of the underground mobile equipment. This if coupled with an expected improved higher head grade, will see the company back on track to achieving its budgeted performance,” ABC Stockbrokers said.
In the period under review the cost of production grew by 29% for the first quarter ending June 30 2014 as compared to a marked decline of 27% on the same period in 2013 due to the rise in nickel price on the back of the off-take agreement that the company has with Glencore.
“The increase in costs was, however, attributed to the rise in nickel price on the back of the off-take agreement that the company has with Glencore. Lower production levels due to the decommissioning of the underground mobile equipment for refurbishment also added to the increased costs as efficiency levels were compromised,” the report reads.
ABC Stockbrokers said despite the seemingly lower statistics in the first quarter to June 2014, BNC was still ahead of its year on year performance on all statistics. It however said the challenges in the rise in all inclusive cost of production was temporary and significantly below the levels recorded in the first quarter of 2013.
When Trojan resumed operations in 2013, average costs were over $21,000 per tonne due to carried over legacy expenditures through retrenchment costs.