Atlas Mining reports 79% drop in net income

MANILA, Philippines - Listed Atlas Consolidated Mining and Development Corp. yesterday reported a 79 percent decrease in its net income despite raking in higher revenues mainly because of lower realized metal prices and the expiration of a unit’s income tax holiday.

In an exchange filing, the company announced a 12 percent uptick in revenues to P16.2 billion in 2014, driven by higher earnings from copper, gold and nickel.

Revenues from copper – that comprised 85 percent of the total revenues – rose 10 percent to P13.7 billion as concentrate shipments in 2014 rose 14 percent in terms of volume. Revenues from gold rose 17 percent to P1.3 billion.

The company’s earnings before interest, taxes, depreciation and amortization (EBITDA), however, fell seven percent to P5.1 billion in 2014 due mainly to weaker metal prices.

Its consolidated net income fell to P397 million from P1.9 billion in 2013 due to the combined effect of lower metal prices, increased depreciation, higher financing charges, and higher income tax provision in 2014 following the expiration in October 2013 of the income tax holiday given to its subsidiary Carmen Copper Corporation (CCC).

Atlas Mining attributes the increase in its revenues to higher productivity of CCC in the Toledo copper mine in Cebu following the commissioning of the expanded processing plant in March 2014. The plant, in 2014, registered a 14 percent increase in its average daily milling throughput of 49,200 tons per day from 43,000 tons per day in 2013.

Copper recovery likewise increased to 85 percent from 82 percent in 2014. The improvement in throughput and copper recovery pushed copper production higher by 15 percent to 105.5 million pounds of copper metal in concentrate and gold output by 23 percent to 26, 310 ounces.

The company said, however, that the full impact of the plant expansion has yet to be realized as changes in process design still have to be carried out for optimization and to prepare for weather disturbances expected in the fourth quarter.

With improved production, the total volume of copper concentrate shipped out in 2014 rose 14 percent to 176,000 dry metric tons. Copper metal content rose 15 percent to 103.8 million pounds of copper metal in concentrate.

As a result, revenues increased despite the slide in the realized prices of copper and gold in 2014. Copper prices fell five percent to an average of $3.12 per pound, while gold prices fell nine percent to average at $1, 265 per ounce.

Production of Berong Nickel Corp. (BNC), in which Atlas Mining holds a 25 percent interest, doubled to 1.3 million wet metric tons in 2014, while shipment rose by 58 percent. This translated to a net income of P322 million, a turnaround from net loss in 2013.

Atlas Mining executive vice president Adrian Ramos said that for this year, the company would strive to reduce operating costs and enhance risk mitigation systems.

“2014 challenged Atlas Mining to manage the constraints on the optimization of its expanded processing plant and the effects of uncontrollable events such as the drop in world copper prices and the unusual weather phenomena. This year, to reinforce our resilience, the Atlas Mining team will focus on maximizing efficiencies to reduce operating costs, and on enhancing risk mitigation systems,” he said.