article summary .........*last year they sold PMM shares ($26...

article summary .........

*last year they sold PMM shares ($26 million) so profit looks worse than it is
*pouring money into the nickel project
(hence high costs of goods sold)
BUT
*revenue is up 21%
*maganese prices to move on up
*according to Kiernan still on track to hit this years estimate ($85 million)

Consolidated hits 'bump'- 92% fall
Email Print Normal font Large font By Alex Wilson
March 3, 2006

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AdvertisementDIVERSIFIED miner Consolidated Minerals said a 92 per cent slump in its interim profits was a "speed bump" on the road to increasing earnings.

CSM managing director Michael Kiernan said yesterday a sharp drop in manganese prices and lower nickel prices were behind the tumble in half-year profit to $3.16 million, from $41.13 million in the first half of 2004-05.

"This has not changed our view of the robustness of Chinese growth or the continued long-term strength of demand for the high-grade minerals we produce," he said.

"The first-half result was a 'speed bump' of the kind which is to be expected during any strong growth cycle."

The company said the comparative drop in profit had been accentuated by the one-off profit of about $19 million that it made in the first half of 2004-05 from the sale of its stake in iron ore producer Portman Ltd.

CSM has been pouring its free cash into the development of its nickel mines at Kambalda and, while the project had taken a bite out of the latest profit figure, Mr Kiernan said nickel would become a major contributor.

The nickel price had recovered and there were signs the recent oversupply of manganese had worked its way through, he said.

Mr Kiernan said higher prices and rising nickel production meant the company expected to produce an after-tax profit of about $85 million in 2006-07 and $115 million in 2007-08.

The miner said its operating costs for the interim period had increased "in line with industry wide pressures".

Despite the falling prices and expenditure on development cutting into the profit figure, the company still boosted its revenue for the half by 21 per cent to $103.76 million.

The miner declared an interim dividend of 3c per share, down from 6c in the previous year.

The result came after the market closed, with CSM shares ending the day down 5c at $2.56