Minara bullish on nickel outlook as profit drops22-February-08...

Minara bullish on nickel outlook as profit drops
22-February-08 by AAP


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Minara Resources Ltd, Australia's second largest nickel producer, has booked a fall in full year profit and forecast strong nickel prices amid robust demand from China.

The nickel miner reported net profit of $272 million for calendar 2007, down 19.6 per cent the previous year's $338.7 million.

Minara attributed the drop to a loss of production associated with maintenance issues and a planned shutdown of its Murrin Murrin facility in Western Australia.

The company produced 27,585 tonnes of nickel during 2007, compared to 31,524 tonnes the previous year.

Minara said it was "anticipating an improvement in overall plant performance in 2008" and forecast production of 34,000 to 38,000 tonnes of nickel.

Full year output for 2008 includes 2,000 tonnes of nickel from the heap leach operation.

"The successful completion of the major statutory shutdown was the culmination of many years of hard work and a major investment by the company," Minara chief executive Peter Johnston said in a statement.

"We have now resolved the plant's major technical legacy design issues."

The Murrin Murrin operation, a high-pressure, acid-leaching process used to exploit low-grade ore, has struggled with expensive repairs since its start-up in 1999.

The project is a joint venture between Minara, which holds 60 per cent, and commodities trader Glencore International, which holds the balance.

Glencore also is a major shareholder in Minara and Swiss-based mining giant Xstrata Plc.

Minara delivered a 2.5 per cent increase in revenue of $771 million for the year, underpinned by strong nickel prices.

The company was positive on the outlook for nickel prices saying "we believe that the nickel market will remain strong for the next two to three years primarily driven by Chinese demand".

Brokerage Goldman Sachs JBWere, however, is not as positive on the outlook for nickel prices and believes the base metal will remain in oversupply for the next two years.

"With a two-year view at least, we are bearish on the nickel price outlook," Goldman Sachs said in a February 12 client note.

Minara declared a final dividend of 15 cents, taking total dividend repayments for the year to 40 cents.

The company's shares added 23 cents or 4.11 per cent to $5.83 by 1220 AEDT.