TORONTO (miningweekly.com) – Base metals producer Mercator Minerals on Monday reported lower-than-expected first-quarter adjusted earnings, placing additional pressure on the company’s already stressed balance sheet.

Revenues for the quarter ended March 31 were 16% lower at $54.5-million, when compared with that of the same quarter a year earlier, when the company reported revenues of $65.2-million. Mercator late on Friday said the decline was mainly owing to a 12% drop in the realised copper price, and a 21% decline in the price of molybdenum.

Mercator reported an adjusted net loss of $9-million, or $0.03 a share, compared with an adjusted net profit of $1.5-million, or $0.01 a share. Analysts had on average expected adjusted earnings of nil cents a share on revenues of $59.98-million.

Laurentian Bank Securities Equity Research mining analyst Christopher Chang said the reported earnings were below expectations.

In a research note to clients, Chang said he believed this put additional pressure on the company’s already stressed balance sheet as unrestricted cash of only $7.8-million was “well below” his forecast.

“Given the weak molybdenum price environment, the company’s debt repayment schedule and capital expenditure programme, we believe Mercator could seek additional capital as early as this quarter,” he said.

Year-on-year cash costs of production were 18% higher for copper and 6% lower for molybdenum. The higher on-site operating costs on a per-ton-milled basis were mainly a result of the lower throughput rates and lower production levels attained in the quarter.

Mercator reported lower copper-equivalent production as a result of mill maintenance downtime, reconfiguring the semi-autogenous ball mills and mining through harder areas of the Mineral Park copper/molybdenum mine, in Arizona.

The company produced 20.4-million pounds of copper equivalent in the three months, which was a 15% quarter-on-quarter decline. This comprised 8.3-million pounds of copper in concentrates, 800 000 lb of cathode copper, 2.4-million pounds of molybdenum and 152 100 oz of silver.

The company in March said since the start of the year, Mineral Park had taken additional maintenance downtime to reinstall the natural gas turbine. The company also said it was currently mining through harder sections of the mineral reserves.

As a result, Mercator expected production in the first quarter to be lower than in the fourth quarter, owing to lower throughput and grades.

Mercator reiterated its production guidance for the year of 41.5-million to 46.5-million pounds of copper, consisting of 38.5-million to 42.5-million pounds of copper in concentrates and three-million to four-million pounds of copper cathode, as well as 11-million to 12-million pounds of molybdenum, and 600 000 oz of silver.

Mercator’s shares closed down 3.77% at C$0.255 apiece on the TSX on Monday.