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Mincor Delivers Robust $28.1m Profit

Thursday, August 19th, 2010

Australian nickel miner Mincor Resources NL (ASX: MCR) announce a $28.1 million net profit after tax for the year to 30 June 2010, cementing its return to profitability following the Global Financial Crisis and laying the foundations for its next phase of growth.
The strong financial result, which represents a $44.8 million turnaround from last year’s loss of $16.7 million, reflects the success of Mincor’s operational strategy in the volatile period following the GFC, with reduced production volumes more than offset by higher margins.
The full-year result was struck on gross revenues of $184.0 million (2009: $191.9 million) which declined only marginally despite a 32% drop in nickel production to 10,673 tonnes of nickel-in-concentrate (2009: 15,768 tonnes).
The average cash cost of production was A$5.66/lb (2009:A$5.37/lb), with the 32% rebound in nickel prices during the year combined with tight control on operating costs resulting in an 80% improvement in average cash operating margins to A$5.45/lb (2009: A$3.02/lb).
Underlying earnings from operations (operational earnings before capital, exploration and head office costs) increased by 24% to $83.1 million (2009: $67.2 million), while EBITDA (earnings before interest, tax, depreciation and amortisation) increased by 72% to $77.6 million (2009:$45.2 million).
The net profit figure includes $6.3 million in regional exploration costs incurred during the year and written off against profits. The Company also incurred $9.6 million in extensional exploration costs that were capitalised and $19.2 million in capital costs.
Despite this high level of exploration and capital expenditure, and the payment of $14 million in dividends, cashflows were very strong, with a net cash inflow during the year of $51 million. Accordingly, Mincor’s cash balance at 30 June 2010 was $126.8 million (2009: $75.8 million), and its net cash position (cash plus receivables net of creditors and accruals) was $119.6 million.
With no debt, the Company’s balance sheet continues to support its strong forward growth strategy.
The excellent financial performance for the 2010 financial year has enabled the Directors to maintain Mincor’s commitment to returning profits to shareholders by lifting the final dividend by 50% to 6 cents per share. This brings the full-year dividend to 9 cents per share, representing 64% of profits. Mincor has now paid or declared over $98 million in dividends since start of mining in 2001.
“This is a very pleasing result which completes our rapid turnaround from the global shock of the GFC,” said Mincor’s Managing Director, David Moore. “The financial performance of the Company over the past 12 months vindicates our operational strategy and is a tribute to the skill of our miners and their management teams at site, as well as the excellent performance of Byrnecut, our contractors at the Mariners Mine.”
“Thanks to our outstanding exploration success during the year, which saw us replace 140% of the nickel reserves that we mined, we now have the foundations in place for a new phase of production growth,” Mr Moore said.
“With the successful re-start of the Miitel Mine, we are targeting a 35% increase in production over the next two years. This together with the exciting range of exploration opportunities both within and outside the Kambalda District creates a compelling picture of growth for Mincor – already one of Australia’s most successful mid-cap mining companies.”

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