Sharp fall in profit of Western Mining

Press, Volume CXII, Issue 32847, 22 February 1972, Page 20

Sharp fall in profit of Western Mining

The unaudited net profit of Western Mining Corporation, Ltd, for the 28 weeks to January 4, fell 34.0 per cent to $6.2 million compared with the corresponding period last year, the directors said in their midyear report.

i This result —which is the profit for the present company only—is after writing off exploration expenditure of $500,000 (sl.sm) and charging depreciation and amortisation of ssm ($5.5m), and interest of ssm (sl.9m).

Unaudited consolidated profit for the first half of 1971-72 was $6.2m ($9.7m). A timing difference in receipts of dividend from Alcoa of Australia, Ltd, accounts for the absence of an addition on consolidation in the first half of 1971-72, the directors said. Sales of nickel contained in metal and concentrate were 6.5 per cent lower than in the corresponding period last year, the reduction being from 32.9 m pounds in 197071 to 30.8 m pounds in 197172. Market problems

Business conditions in nickel markets were difficult during the first half-year, with a decline in the total consumption of new nickel and consumers continuing to reduce stock levels.

The ready availability of scrap and free market nickel at low prices also affected sales by the main producers.

To assist customers with serious stock problems, some metal and concentrate shipments scheduled for the first half of 1971-72 were deferred to the second half of the year. The changed circumstances of the nickel market and currency changes have had a particularly serious effect on the Japanese nickel smelters, with whom the company has long-term contracts. As a result, there was a

cutback in shipments of concentrates to Japan compared with the higher-than-contract levels in the previous year, the directors said. Sales revenue from nickel and associated products was 11.5 per cent lower than in the corresponding period last year. Effect of currency Major nickel producers base their prices on the Canadian producer price,

which is set in United States dollars and has not been changed since the currency realignment. It has been necessary for the company to absorb the reduction in revenue and profit because of the Australian dollar revaluation in order to remain competitive in world markets. The revaluation resulted in a loss of about slm in revenue and profit during the first half of 1971-72.