TORONTO (miningweekly.com) – Despite operational improvements at its flagship Hycroft mine, in Nevada, which had resulted in US miner Allied Nevada Gold reporting soaring first-quarter precious metals output, its net profit declined by 96%.

The Reno, Nevada-based miner on Monday reported that for the quarter ended March 31, net income totalled $332 000, or nil per share, compared with net earnings of $8.81-million, or $0.10 a share.

Adjusted income was $0.01 a share, beating the average Wall Street analyst expectations of an adjusted loss of $0.08 a share for the period.

During the period, revenue rose 73.8% to $85.5-million, up from $49.1-million in the same quarter of 2013.

Gold sales more than doubled to 59 470 oz, from 27 256 oz, and silver sales jumped to 406 470 oz, compared with 174 766 oz of silver a year earlier. Gold output almost doubled in the period to 60 114 oz, from 38 019 oz, and silver output soared to 412 506 oz, up from 188 000 oz in the same period of last year.

The average realised price of gold declined by nearly 20% to $1 299/oz, and that for silver declined by 33% to $20/oz.

The company said that the heap leach expansion projects completed during the second half of last year, which included a Merrill-Crowe plant, a new leach pad, and adding two electric wire rope shovels boosted output.

However, during the first quarter, engineering issues delayed the start-up of a new crushing system, which forced the miner to modify its mine plan to preserve higher-grade ore originally scheduled to be mined in the first quarter for subsequent quarters.

The miner said that the new crushing system was run intermittently through April, until being shut down to enable the manufacturer to resolve an engineering design issue on the secondary and tertiary crushers.

“We are working with the manufacturer to implement a temporary solution, while the redesign is being completed and new mantles are cast, that will enable us to begin crushing again by the end of the second quarter; however, we do not have a definitive date that we expect to restart the crushing system. We have developed a modified mine plan that we believe could still enable us to meet our 2014 sales guidance, should we not be able to crush ore for the remainder of 2014,” the miner said in a regulatory filing.

Allied Nevada said that it expected to sell between 230 000 oz and 250 000 oz of gold and 1.7-million to 2-million ounces of silver this year, despite the possibility that the company would not be able to operate the crusher for the remainder of the year.

HYCROFT EXPANSION

Allied Nevada last month released the results of a Hycroft mill expansion prefeasibility study, which indicated a net present value of $1.7-billion.

The study, completed by M3 Engineering and Technology, assumed a two-phase construction plan for the expansion, including the added ability to create doré onsite using the ambient alkaline oxidation process to oxidise sulphide concentrate, as compared with the previous plan of selling concentrate.

The project, over the 20-year life of the mine, was estimated to generate an after-tax internal rate of return of 26.5%. The average yearly output for the first five years was pegged at 450 000 oz of gold and 21-million ounces of silver, at cash costs of $478/oz.

The first phase of construction was expected to cost about $900-million, to deliver output of 550 000 oz/y of gold equivalent by 2017, while Phase 2 was estimated to cost $422-million, increasing output to 800 000 oz/y of gold equivalent by 2018.

The study was based on a gold price of $1 300/oz, and a silver price of $21.67/oz.

The company said that its board had reviewed the results of the prefeasibility report, and had decided to move forward with the feasibility study, the results of which are expected by the end of the third quarter.

Meanwhile, the company also last month said that it had completed the sale of a 75% controlling interest in the Hasbrouck and Three Hills properties to West Kirkland Mining for $20-million, allowing it to focus exclusively on the Hycroft operation.

Allied Nevada’s Amex-listed stock on Tuesday fell 5.33% to $3.285 a share, and on the TSX the stock fell 5.26% to C$3.60 apiece.