JOHANNESBURG (miningweekly.com) – Weakened gold and nickel prices paired with lower-than-planned production figures for the two metals have driven a decrease in the earnings of multicommodity miner Mwana Africa, narrowing group earnings before interest, taxes, depreciation and amortisation from $25-million in the 2014 financial period to $18.8-million in the 12 months to March 31.

This despite group revenue lifting 6.9% year-on-year to $152.3-million and net cash from operating activities swelling 81.3% to $11.6-million.

Noting in a results statement on Wednesday that it expected profits for the first half of the 2016 fiscal period to be lower than that of the second half of the prior year, company chairperson Yat Hoi Ning described the period under review as “challenging”, adding that he expected Mwana's operations and financial situation to “progress” in 2016, although this remained subject to metal prices.

“Nevertheless, by the current year-end in March next year, the group's balance sheet should be stronger than at the start of the year,” he maintained.

Gold recovery from Mwana’s flagship producing asset, the Freda Rebecca gold mine, in Zimbabwe, declined from 82% in the prior year to 79%, while gold sales of 57 799 oz were largely in line with that of the prior year.

The operation’s cash costs increased from $959/oz in 2014 to $1 067/oz in the period under review, while all-in sustaining costs rose from $1 186/oz to $1 259/oz, as lower grades led to greater mill tonnages.

"At Freda Rebecca, gold production was in line with the prior year but slightly below management’s expectation and this was owing, in part, to equipment failures that gave rise to recovery problems in the processing plant, as well as a delay in accessing the mine's higher-grade orebodies.

“These problems have now been rectified and I confidently expect that our underground and surface operations will attain their full potential during the 2016 financial year,” said Hoi Ning.

Cash costs at Mwana’s 74.3%-owned subsidiary, the Bindura Nickel Corporation (BNC), rose from $11 567/t to $12 644/t year-on-year, mirroring a lift in all-in sustaining costs from $12 462/t to $14 428/t over the 12 months as equipment refurbishment added to costs and restricted mine tonnages.

The operation did, however, manage to lift nickel-in-concentrate sales from 7 129 t to 7 352 t over the year, despite nickel recoveries marginally declining to 84% from 86% in the prior year.

Mwana had, meanwhile, secured the funding required to finance and restart the Bindura nickel smelter, which was planned for April next year.

A fully subscribed $20-million bond was completed in the fourth quarter of the financial year, with the proceeds of the bond going towards the restart of the smelter.

Some $16.4-million of the bond funding was banked before year-end and, of the outstanding balance of $3.6-million at year-end, $1.5-million was received by BNC in early July, with the remainder to be transferred by the end of September.

“Resumption of smelting will provide ample capacity to process our own concentrates into nickel leach alloy. The smelter's excess capacity will be available for toll smelting of other regional producers' concentrates,” he noted.

Hoi Ning added that almost all refurbishment and replacement work at Bindura's Trojan mine, in Zimbabwe, had been completed and mining would now be positioned to extract ore from the "massive" orebodies, where grades were higher than in those bodies that had historically provided the bulk of the mine's ore.

He further reported that progress on the tailings retreatment project at Mwana’s Klipspringer diamond property, in South Africa, had been steady.

“Our project to recover fine diamonds from old slimes residues has continued. Slimes resources are limited and evaluation of the viability of reprocessing other residues and of restarting underground mining is under way,” he said.