Millennium Minerals earns $31.76m full year profit on gold sales
Millennium Minerals' (ASX: MOY)
has been able to achieve a significant maiden profit for its first full
year of commercial gold production from the Nullagine Gold Project in
Western Australia, for the period ending December 2013.
This is even more impressive considering the difficult operating conditions for the period.
Millennium has reported an unaudited after tax profit of $31.8 million for the twelve month period ended 31 December 2013 (FY2013).
The unaudited after tax profit includes an unrealised derivative gain of $16.2 million related to the valuation of the company’s hedge book on 31 December 2013.
The underlying profit before treasury, tax and finance for the twelve month period was $15.9 million.
Brian Rear, managing director, commented: “Despite a very challenging year, delivering a maiden profit result for the first full year of commercial production represents a significant milestone for Millennium, particularly during a time when the gold industry is experiencing very difficult operating conditions.
"The year results are a credit to the site operating team just 12 months from the start of commercial mining activity.
"This profit result was achieved despite the impact on site of Cyclone Rusty earlier in the year; unexpected permitting delays that postponed the treatment of the higher grade material from Golden Gate and lower than expected ore grade out of the Golden Eagle fresh ore zone in the last quarter."
Mine operating level
At the mine operating level, the gross profit for FY2013 was $21.2 million based on sales of $100.3 million and cost of sales of $79.1 million.
Total gold sales for the year were 63,446 ounces. The cost of sales includes depreciation, amortisation, stockpile and waste stripping adjustments of $7.5 million. Mine level EBITDA was $28.7 million.
The unaudited full year profit announcement is prior to year end impairment testing of the carrying value of the company’s assets.
Millennium said an updated life-of-mine plan is scheduled to be produced in February at which time impairment to the carrying value of the assets will be tested.
To the extent there is an impairment charge as a result of this testing, any impairment will reduce the FY2013 profit. Any impairment charge is a non-cash item and therefore will not impact on the Company’s cash position or operations.
Nullagine Gold Project
The Nullagine Gold Project is located in the Pilbara Region in
Western Australia, and comprises seven deposits on granted mining
The largest deposit is known as Golden Eagle, and is located 10 kilometres south of the Nullagine Township.
The 1.5 Mtpa CIL processing plant was commissioned in August 2012 and first gold was poured in September 2012, with commercial production declared from January 2013.
With a net profit after tax (excluding an unrealised gain on gold forward contracts of $16.2m) of $15.5m implies an earnings per share of $0.071 which places Millennium Minerals on a current price earnings multiple of just 3.2x. Indicating the company is significantly undervalued relative to forward earnings.
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