Kambalda nickel miner Mincor Resources NL has extended its unbroken track record of dividend payments after declaring a fully franked interim dividend of 2 cents per share on the back of a strong operational performance and steady underlying earnings for the half-year ended 31 December 2012. The strong operational result was driven by above-forecast production of 5,063 tonnes of nickel-in-ore at better-than-targeted cash costs of $5.07/lb, delivering an operating cash flow of $16.53 million despite the lowest nickel prices since the height of the global financial crisis. The average realised nickel price for the half was 10% lower than the previous corresponding half at A$8.26/lb (1HFY12: A$9.20/lb).

The continued improvements in Mincor’s operational performance saw cash operating costs fall by 16%, compared with the previous corresponding half, to A$5.07/lb (1HFY12: A$6.05/lb), resulting in a steady average cash margin of A$3.19/lb (1HFY12: A$3.15/lb) despite the lower nickel price. This excellent operational performance delivered healthy earnings before interest, tax, depreciation and amortisation (EBITDA) of $14.77 million (1HFY12: $15.5 million) on sales revenue of $55.5 million (1HFY12: $62.4 million). Operating earnings (revenue less cash costs) were $20.6 million for the half (1HFY12: $20.8 million).

Despite this strong performance however, the sharp reduction in revenue due to the low nickel price meant that earnings were insufficient to fully cover accumulated (non-cash) depreciation and amortisation costs, resulting in a half-year net loss of $2.21 million (1HFY12: $0.35 million). Nevertheless, the strong operational performance allowed Mincor’s directors to declare a 2 cents per share fully-franked interim dividend for the half year. The dividend also underlines the continued strength of the Company’s balance sheet, with cash and receivables of $75.9 million at 31 December 2012 and no debt. Mincor produced 157,863 tonnes of ore grading 3.21% nickel for 5,063 tonnes of nickel-in-ore for the half-year (1HFY12: 5,184 tonnes), at an average cash cost of A$5.07/lb payable nickel. The Company is well on-track to meet or exceed its full-year production target of 9,000 tonnes nickel-in-ore, and to substantially outperform its cost target of A$5.50/lb.

Commenting on the first half results, Mincor’s Managing Director David Moore said: “The past six months has seen the nickel price reach what may be its nadir, having dropped around 45% between February 2011 and August 2012. This has put the entire industry under pressure and decimated profits globally. Under these circumstances, it is pleasing that Mincor has been able to maintain a strong operating performance and continue to generate substantial levels of free cash.

“This free cash has been used to advance our exploration projects in Kambalda, regional Australia and PNG. In addition, we paid out a final dividend for FY2012, and have declared an interim dividend for the first half of FY2013. So although bottom-line profits are hard to come by at these nickel prices, shareholders continue to be rewarded with fully-franked dividends and continue to enjoy the upside potential of our vigorous exploration efforts.

“Mincor will maintain its focus on low-cost, high-margin nickel production, while investing substantial resources into expanding our Ore Reserves in Kambalda, as well as pursuing our other exploration targets. Our financial position remains strong with $70 million cash in the bank and no debt. “While it is disappointing to report a bottom line accounting loss, we believe that Mincor is in great shape and stands ready to reap the benefits of any positive change in commodity prices or exchange rates – while retaining the ability to weather sustained periods of low prices. “That’s a great position for any mining company, and I want to thank our entire team for their hard work in getting us here.”