JOHANNESBURG (miningweekly.com) – Aim-listed Weatherly International posted a loss of $5.7-million for the financial year ended June 30, compared with a profit of $1.6-million during the prior financial year, as lower copper prices reduced the company’s gross profit to $600 000.

The company noted that while its actual contained copper tonnes shipped increased, from 4 485 t during the 2013 financial year, to 4 590 t in the period under review, the average sales price declined from $8 273/t to $7 397/t.

“While this was a reduction on the previous year, we benefitted from copper hedges, as the average spot price over the period was $7 014/t,” Weatherly said, adding that, as the copper price had reduced, the board had chosen to run down its hedges, which meant it was now unhedged on commodity price and currency.

Weatherly’s revenue also declined from $35.6-million to $32.2-million during the financial year.

Weatherly CEO Rod Webster pointed out that at the end of the financial year, inventory with a sales value of $8.8-million was still awaiting shipment compared with inventory of $5.4-million at the previous year-end, which also impacted on last year’s financial results.

Webster also noted that, despite lower copper prices reducing already tight margins, Weatherly’s operations remained cash flow positive throughout the year and the company was able to meet all its ongoing capital and debt repayments, having paid off $2.5-million in debt over the period.

“[Further], to reduce costs and restore margins in a lower copper price environment, the company undertook a radical overhaul of its operations aimed at boosting productivity in the second half of the year.

“Unfortunately, this year, investors will only see the costs of these changes, while the benefits will accrue in the following year. However, the changes we have introduced should help us take our Central operations closer towards our goal of 7 000 t/y of copper and, in doing so, restore profitability,” the company said.

Weatherly noted that, during the financial year, the combined output from its Central operations, which comprised the Matchless and Otjihase copper mines, in Namibia, was 5 086 t, at a cash cost of $6 729/t.

Webster also noted that the effects of the restructuring had already become visible during the second half of the 2014 financial year, with the annualised production during the last six months of the period reaching 6 000 t/y, as opposed to 5 000 t/y for the entire financial year.

Costs for the last six months of the period under review were also lower at $5 776/t, he said, stating that, in light of this, the company was pleased with the results of its turnaround to date, adding that unless the copper price fell below $6 000/t Weatherly was expected to be sustainable in future.

Weatherly also, on Tuesday released an operational update for the first quarter of the 2015 financial year, revealing that its Central operations had produced 1 462 t of copper in the three months ended September 30 compared with 1 507 t in the fourth quarter of the 2014 financial year.

Cash costs for the first quarter of the 2015 financial year amounted to $5 844/t.

The company noted that the changes made during the overhaul had led to a 14% increase in tonnages mined during the first quarter of the 2015 financial year; however, this was offset by lower grades from some of its development areas.

Further, Webster noted that the move to undertake mostly primary mining, as opposed to the current method of pillar recovery, at the Otjihase mine, would also lead to higher production at lower costs once the transition had been made during the first half of 2016.

In the medium term, Weatherly would also look to add satellite mines to its portfolio to fill up the capacity of its Otjihase concentrator. Currently, the company used only 48% of the concentrator’s capacity; therefore, costs were higher than necessary. 

Meanwhile, the company also noted that the development of its Tschudi project was progressing well, with the project about 80% complete.

“The developments at Tschudi are key to the future of the company and will help us grow into the 25 000 t/y producer we aspire to be. Tschudi will transform the company by adding 17 000 t of copper cathode to existing production from the Central operations,” Webster commented.

The Tschudi project was on schedule to deliver its first copper in the second quarter of 2015.