BINDURA Nickel Corporation (BNC) posted a profit after tax of $11,1 million for the year ended March 31, 2015, less than half of what it recorded in the previous year as an increase in the cost of sales eats into the company’s bottom line.
BY VICTORIA MTOMBA
In the year ended March 2014, BNC recorded an after tax profit of $23,6 million. Cost of sales during the period increased by 45% to $42,8 million attributed to investment in mobile equipment refurbishment and year-on-year salary increases among others.
The group’s turnover that comprised 7 352 tonnes of nickel valued at $78,9 million from $65 million at 7 129 tonnes representing an increase of 3% in tonnes sold and 21% in value sold compared to the prior period.
Average nickel price during the year stood at $16 700 per tonne compared to $14 298 per tonne.
“Cost of sales increased by 45% to $42,8 million compared to $29,6 million in 2014. The increase over the prior period was a result of the investment in mobile equipment refurbishment, a year-on-year salary increase following increases implemented in January 2014,”the group said.
The group said the mining operations would reach a steady state going forward with the investment in mobile equipment in the last six months and further investments in the third quarter.
Nickel demand is forecast to improve in the short term and this will have an impact on the group going forward, it said.The group forecast $13 667 per tonne for the rest of the year.
BNC said the smelter project had begun although it was stalled by delays in the fundraising, which adversely affected the company’s ability to make firm commitments with suppliers.
“The smelter project is expected to be finalised in the first quarter of 2016, with first sale of leach alloy forecast in April 2016.While negotiations are underway with various parties for an off-take agreement, the timing of the conclusion of such agreements is sensitive to the current state of nickel market and directors will conclude such negotiations when appropriate,”the group said.
It said cash flows were dependent on the nickel price and during the period under review a significant drop was experienced from $17 375 per tonne during the beginning of the year to $13 746 tonnes and the end of the financial year.