A 31 per cent hike in half-year cash costs at gold miner Amara's (AMA) ageing Kalsaka mine, to $1,357 an ounce (£864), and $11.3m of second-quarter impairments, helps explain this hefty first-half loss. A slump in the gold price in recent months hasn't helped, either.
That gold price fall prompted Amara to find around $2.1m of annual cost savings, which included a 25 per cent reduction in staff numbers. Moreover, deteriorating grades at Kalsaka meant that half-year gold production at 19,414 ounces was slightly short of estimates - although full-year production guidance was maintained at the lower end of a 50,000-60,000 ounce range.
With production at Kalsaka petering out, the focus is now on other projects and management intends to optimise the production plan for its Baomahun mine, which should firm up the commercial case for the Sierra Leone-based project. While blast-hole drilling at the newly-licensed Sega mine in Burkina Faso is expected to generate robust cash flow in the near term. Indeed, a re-jigged plan for Sega will allow processing of higher-grade ore, and should reduce total cash costs to $700 an ounce.
Broker Westhouse expects a full-year loss per share of 11.2¢, with EPS of 4.7¢ forecast in 2014 (from 2.6¢ in 2012).
| AMARA MINING (AMA) | ||||
|---|---|---|---|---|
| ORD PRICE: | 18p | MARKET VALUE: | £30m | |
| TOUCH: | 17.8p-18.3p | 12-MONTH HIGH: | 92p | Low: 8.8p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 83¢* | NET DEBT: | 7% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 47.5 | 5.51 | 0.49 | nil |
| 2013 | 22.1 | -16.5 | -9.31 | nil |
| % change | -53 | - | - | - |
*Includes intangible assets of $127m, or 76¢ a share £1=$1.57 | ||||
