MMG gold mine closure to cost firm US$21.6m
MMG, the Hong Kong-listed overseas mining unit of state-run China Minmetals - the nation's largest metals trader - will book US$21.6 million of costs related to the ending of production at its gold mine in Laos which could have a significant impact on its bottom line.
The one-off cost, arising from MMG's cessation of gold production and restructuring at its Sepon mine to focus on copper production, would be booked in last year's financial records, the company said in a statement.
In March, MMG is forecast to post a net profit of US$63.55 million for last year, said the average estimate of six analysts polled by Bloomberg. It previously reported a net profit of US$24.9 million in last year's first-half, and US$192.5 million in 2012.
MMG said the gold mine is being closed because of depleted ore reserves, rendering it a loss-making operation. Its operating cost was US$1,864 per ounce, above MMG's target of US$1,475 to US$1,625.
MMG yesterday said its total copper output was 187,738 tonnes last year, up 23 per cent from 2012, and is close to the high end of its target of 175,000 to 190,000 tonnes announced a year ago.
Its zinc output was 600,221 tonnes last year, down 4 per cent from 2012 but above its target of 572,000 to 590,000 tonnes.
Declining metal prices was the main reason for MMG's lower profits in the past two years. The London Metal Exchange cash-market price of zinc dropped by 2.1 per cent year on year in last year's fourth quarter, and that of copper fell 9.6 per cent. The two metals are MMG's biggest profit drivers.
The company is targeting copper output of 173,000 to 186,000 tonnes and zinc output of 600,000 to 625,000 tonnes this year. It expects relatively stable production cost at its mainstay zinc mine in Australia, but higher costs at its leading copper production site in Sepon.