Mincor Resources NL (ASX: MCR) is a metals and mining sector company based out of West Perth. It primarily explores and extracts mineral resources including nickel, copper and gold deposits in Australia. Recently, the company announced to have signed a new term sheet which entails the major underlying operating principles for a binding Ore Tolling and Concentrate Purchase Agreement (offtake agreement) with BHP Billiton Nickel West Pty Ltd, replacing the 20-year agreement Mincor had with BHP Nickel West, which expired in February 2019.
The partnership depicts a key milestone in the company’s plan to restart nickel mining operations in the Kambalda District of Western Australia. As per the commercial specifications, the contract will commence from the date of delivery of the first ore until the fifth anniversary of the Start Date or December 31st, 2025. Mincor is allowed to process up to 600k tpa of nickel sulphide ore quantity at the Kambalda site. The processing charge and payable rates are confidential.
The offtake agreement is still subject to Board approvals within both the companies, and needs to be finalised within two months. The step provides a strong impetus to ongoing resource extension and exploration programs.
For the half-year ended December 31st, 2018, Mincor reported the total gold sale of 9,135 ounces at an average price of AUD 1,691/oz, generating gross revenue of ~ $ 15.47 million. During the period, the Group incurred an operating loss after income tax of $ 4.47 million, up on $ 2.58 million recorded in the prior corresponding period ended December 31st, 2017.
The loss for the half-year includes around $ 3,402,000 of exploration and evaluation expenditure incurred and expensed and administrative expenses of $ 1,451,000. At the end of the period, the Group had total assets valued at $ 37,004,000 as compared to $ 36,707,000 as of June 30th, 2018, including $ 10,371,000 of cash and cash equivalents, down on $ 14,114,000 as of June 30th, 2018.
There were major cash inflows from operating activities amounting to $ 2.03 million. On the contrary, the investing activities resulted in cash outflows of around $ 5.78 million on account of high payments for mine development ($ 2.6 million) and payments for evaluation and acquired exploration expenditure ($ 3.16 million). The Group reported zero debt as of December 31st, 2018.
During the half-year, the Widgiemooltha Gold Project successfully commenced production in May 2018 with the first gold poured on schedule in July 2018. A total of 214,730 tonnes of ore was mined during the half-year at a mined grade of 1.76 g/t Au. Ore was sourced from Bass, Flinders Main, West Oliver South and West Oliver North pits. At December 31st, 2018, the ore stockpiles for the WGP totalled 54,100 tonnes at 1.7 g/t Au.
Mincor Resources has a market cap of AUD 92.52 million with ~ 220.29 million outstanding shares. On March 19th, at the end of the trading session, the MCR stock closed at a price of AUD 0.420, soaring 12% by AUD 0.045. Today, 20th March, the stock is trading at AUD 0.430, up by 2.38% (As at 1:00 PM AEST).
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