LOW copper prices along with production problems saw Palabora Mining’s (Palamin’s) interim headline earnings per share for the six months ended June dive 56% to R6,97 from R15,80 the previous year.
Palamin’s shares fell 9,66% to R87 yesterday, after it released its interim results, showing it would pay no dividend for the first half after the previous year’s interim dividend of R9,31.
Copper prices have dropped by about 17% over the past year due to the increasing uncertainty over the growth of the global economy. Refined copper production declined 15% to 27,400 tons compared with 32,100 tons for the comparative period last year, due to lower ore grades, and lower efficiencies at the concentrator. The total concentrator recovery averaged 80.3% compared with 82.1% last year.
Net profits for the six months dropped to R338m, compared with the R758m recorded over the same period last year.
For the mining company the period was characterised by falling commodity prices.
The continuing sovereign debt crisis in Europe worsened the demand for commodities in a volatile exchange rate environment, although the low prices were "partially" offset by a weaker rand.
The company said on July 4 that a new ore-hoisting-shaft guide rope had failed while it was being installed, and the failure resulted in damage to the skip loading station situated at the base of the shaft.
However, Palamin announced in a statement that it had achieved its goal of trucking magnetite to Maputo, which resulted in a 34% increase in sales volumes and a 33% increase in revenue.
"This enabled Palabora to offset the decline in copper sales due to declining prices … as well as maintaining a healthy cash balance‚" MD Tony Lennox said in a statement.
Mr Lennox said the company will be fully operational in the fourth quarter of the year.
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