Low nickel prices hit WMC

Press, 5 September 1983, Page 21

Low nickel prices hit WMC

PQ Melbourne The depressed world nickel market has cut annual profit of Australia’s largest producer, Western Mining Corporation Holdings, Ltd, by 42.7 per cent to sAust4.o million in the year ended June 21. The severe downturn from a sAust6.9 million profit last year and in spite of a 38.1 per cent jump in sales, was mainly because of a 16.4 per cent decline in the Australian price of nickel per tonne, the directors said.

However, the latest profit would have shown a substantial improvement if WMC had adopted equity accounting as has CRA, Ltd, which with the aid of higher earnings from mining subsidiaries recorded a half yearly profit of $20.2M from a S33M loss in the first six months of 1982.

In their report, WMC directors said 1982/83 profit would have been $10.7M ($18.3M) on an equity accounting basis.

WMC also said in its

latest profit result that it will raise $123.7M with the placement of 27.5 M shares which will be limited to only Australian institutions. The chairman and managing director (Sir Arvi Parbo) said the share issue was restricted to Australians because of concern about the increasing stake held in the company by overseas interests.

Sales rope to $366.3M ($265.2M) while annual dividend has been cut 2c to 2.5 c. WMC also recorded an exchange loss of SI3M compared to only $4.5M last year owing to the fall in the Australian exchange rate and higher repayments on overseas borrowings. Dividends from companies owned 50 per cent or less fell to $16.7M from $13.6M mainly as a result of the poor performance of the aluminium producer, Alcoa of Australia, Ltd, in which WMC has a 30.5 per cent interest.

An extraordinary loss of $18.9M was incurred on the sale of investments in ,80.2 per cent mining subsidiary

BH South, Ltd. Sir Arvi said the company had done well to increase nickel sales by 31.6 per cent to 47,867 tonnes in the latest year.

“That was a very good result considering that it was very hard to sell nickel this year.” Nickel prices were still depressed in spite of the improvement in other metals and this may be due to the fact that “nickel is related to the steel industry which still hasn’t lifted itself off the floor.” Gold sales increased 222.1 per cent to 102,960 ounces on 41.6 per cent higher gold prices and Sir Arvi said WMC hoped to further increase gold production in 1983/84. Sir Arvi said he would not expect profit to fall in the current year and “would certainly expect some improvement.”

Western Mining was “still basically a nickel company with a healthy gold component and a third interest in aluminium through Alcoa.” With a substantial rise in

the price of gold in the last year, major subsidiary Central Norseman Gold Corporation, Ltd (50.5 per cent WMC) recorded a 51.6 per cent jump in annual profit to June 21 to $16.5M. And Gold Mines of Kalgoorlie (Aust.), Ltd, (WMC 28.9 per cent) announced a 315 per cent increase in annual profit to SU.3M from its mining operations at Mount Charlotte and Fimistion in Western Australia.