In its recent fiscal year,
The profit was achieved after exploration writeoffs amounting to $10.9 million and on a 53% increase in sales revenue to $235.4 million ($153.6 million last year). The boost in revenue reflects the significant increase in average realized nickel prices during the year, supported by a strong operational performance at the Cosmos mine, near Leinster in Western Australia.
Chairman Kerry Harmanis said the earnings represent Jubilee’s best financial performance to date and “reflect the quality of the Cosmos operation, with an excellent gross profit margin of 62% achieved for the year.”
He adds: “While clearly reflecting the strong nickel market, which saw prices touch highs not seen since the 1980s, the result demonstrated our ability to maximize our price leverage in this environment by producing an exceptional operational performance. Importantly, it was achieved during our first full year of operations as a wholly underground nickel producer.”
Harmanis said the smooth transition from open-pit to underground production was one of the highlights of fiscal 2003, with Jubilee achieving excellent recoveries from the Cosmos Deeps deposit. Jubilee produced 12,028 tonnes of nickel in concentrate for the year, compared with 12,303 tonnes in the previous year, from 150,077 tonnes of ore processed at an average grade of 8.23%. Plant recoveries were 97.4%.
It was clear, during his talk at Diggers, that Harmanis was annoyed by comments that Cosmos had a lifespan that would end in 2008. He called the people who made those remarks “naysayers.”
“This story is by no means ended,” he said. “To those who say Jubilee is going to fall over by 2008, I say that’s rubbish.”
His presentation, titled “Cosmos: The New Era,” could have been directly aimed at detractors who do not take a bright view of the high-grade, low-cost operation near Leinster.
Based on current reserves and resources, Cosmos is expected to be depleted by the end of 2008. However, Jubilee is spending at least $12 million this year in an effort to delineate new reserves.
Harmanis says Jubilee’s exploration portfolio of 600 sq. km includes 200 km (strike) of ultramafic rocks.
While the Cosmos Deeps resource is 560,000 tonnes grading 8.2% nickel, drilling has confirmed that mineralization is open both down- and up-plunge. In the 1200 target zone, widely spaced drilling has uncovered high-grade massive sulphides. Highlights include 2.9 metres of 8.4% nickel and 1.8 metres of 3.2% nickel.
Anomaly 1, which Harmanis says resembles a “large chicken,” is a resource of 36 million tonnes grading 0.74%, or 270,000 tonnes of metal. It contains a higher-grade core of 14 million tonnes of 0.98% nickel, or 136,000 tonnes of metal.
Regional exploration is continuing at Cosmos West, Cosmos North, Venus and Mercury.
Harmanis highlighted the 135% nickel price increase during 2003 and the 6.1% demand growth in the same year, which he says was underpinned by strong demand for raw materials in China. He predicts stronger prices for nickel in the long term nickel “as global economic recovery unfolds.”
— The author is a senior writer with Australia’s Paydirt magazine.
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