Having shed its debt related to wholly owned subsidiary Murrin Murrin, Aussie nickel-laterite miner
The proposals will be put to shareholders at Anaconda’s annual meeting in late November. The share consolidation would reduce the company’s issued capital to 461.5 million from the current 6.9 billion.
Shareholders will also be asked to consider a resolution to allow shareholders to sell non-marketable parcels of shares. More than 2,000 of the company’s 5,851 shareholders hold such parcels, which are worth less than A$500.
Earlier this year, as part of a debt-restructuring deal, Anaconda raised A$323 million via a renounceable rights issue to pay off secured creditors of the company’s Murrin Murrin holdings to the tune of US$114 million, or about US25 on the dollar. The deal left Anaconda virtually debt-free.
Anaconda’s debt woes stemmed from its troubled Murrin Murrin nickel-laterite mine in Western Australia, which was financed with about US$500 million in bond debt. The high-pressure acid-leach operation was originally expected to hit its stride by early 2000; plagued with startup problems, it still hasn’t reached annual capacity of 40,000 tonnes nickel.
In 1999, Anaconda filed a claim against U.S.-based Fluor Daniel for problems related to the screening and acid-leach circuits at Murrin Murrin, and the company was recently awarded A$42.3 million, net of Fluor’s counterclaims. Anaconda also received A$12.4 million in costs. So far, Fluor has paid A$27.6 million into an escrow account controlled by creditors of the Murrin Murrin joint venture. Those creditors will take home 90% of the Phase 1 award, subject to Anaconda’s arbitration costs. The second phase of arbitration will consider a separate claim worth A$160 million.
Anaconda says a A$100-million capital works program is starting to pay dividends with sustained improvements in plant reliability. The company hopes to have the plant running at full steam by June 2004.
“Our capital program remains on time and on budget,” says Anaconda CEO Peter Johnston. “We are operating cash-flow positive for the year to date, and underlying production trends continue to improve.”
For the year ended June 30, Murrin Murrin produced 26,676 tonnes of nickel and 1,832 tonnes of cobalt, compared with output of 28,652 tonnes of nickel and 1,589 tonnes of cobalt in the previous year.
Meanwhile, a revised mine plan for Murrin Murrin has halved reserve tonnage, while boosting both nickel and cobalt reserve grades. At the end of June, reserves stood at 145 million tonnes running 1.07% nickel and 0.085% cobalt, compared with 296 million tonnes of 0.99% nickel and 0.064% cobalt at the end of June 2002. The reserves are sufficient for more than 30 years of production. The mined grade over the next five years is expected to be 1.3% nickel, gradually declining to 1.15% over the subsequent decade. Resources are little-changed at 327 million tonnes grading 0.99% nickel and 0.063% cobalt.
Benefiting from a A$553.2-million gain on debt forgiveness and restructuring, Anaconda earned A$500.2 million for the year ended June 30, compared with a $A919.9-million loss in the previous financial year.
Still, excluding the unusual gain, Anaconda’s year-end was accompanied by a net operating loss of $A6.2 million (down from a loss of A$17.7 million a year earlier). Sales revenue increased 11.8% to A$252.6 million, owing to stronger nickel prices, particularly in the second half of the year.
Says Johnston: “The headline number is impressive; however, it is primarily a result of removing the company’s enormous debt burden.”
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