Seven years after work began on the $1 billion Murrin Murrin nickel mine, investors who bought into Andrew Forrest's vision of an Australian laterite nickel industry will receive their first dividend.
Minara Resources, which emerged from the wreckage of Anaconda Nickel last year, yesterday promised a $92 million capital return to investors - equal to 20¢ a share - after handing down a $173.3 million profit for the year.
This was a 35 per cent decline from the previous year's results, which included a $500 million gain from a US bondholders' agreement to accept just 26¢ in the dollar to walk away from a mountain of debt. But underlying net profits jumped 1600 per cent to $108 million on the back of runaway nickel and cobalt prices.
The shareholder return is a reward for the company's legal win over plant engineer Fluor Daniel for design flaws which crippled the mine for five years. After years in the courts, Minara and mine partner Glencore International were awarded $155 million. Minara's share of the payout was $93 million.
The return will be welcomed by shareholders, but it is modest compensation for those who initially invested in Anaconda when construction of Murrin Murrin began in 1997.
Though the stock topped $3.20 in 2000, it began heading south soon after as breakdowns, falling nickel prices, mountainous losses and a boardroom battle between major shareholders took its toll.
By the time the company completed a balance sheet-saving $323 million rights issue last year, the stock was worth just 5¢. It subsequently completed a 15-for-one consolidation late last year.
Managing director Peter Johnston, who replaced Mr Forrest in late 2001, said yesterday the profit result was a good one for shareholders, even though flooding and additional breakdowns meant most of the $116 million second half profit came from the Fluor settlement.
"Although our operations were impacted during the second half of the year we maintained strong cash flow with improving production trends," he said. "The company ends the financial year with a strong balance sheet, zero debt and a cash balance of $149 million."
Mr Johnston said the faults which struck during the half would be rectified over the next six months, and the plant had since operated at nameplate capacity of 40,000 tonnes a year for short periods.
Nonetheless, Minara was budgeting for production of about 35,000 tonnes this year as it completed maintenance and slowly ramped up production.
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Fig Jam
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