PERTH (miningweekly.com) – Lower head grades have resulted in gold miner Ramelius Resources reporting a drop in gold production and profits in the six months to December.

The ASX-listed company on Wednesday reported that gold production in the first half of 2022 reached 132 605 oz, down from the 144 240 oz produced in the previous corresponding period, resulting in sales revenues declining from A$342.2-million to A$310.1-million in the same period.

Earnings before interest, taxes, depreciation and amortisation (Ebitda) for the first half reached A$187.7-million, down 3% from the A$192.8-million reported in the first half of 2021, while net profits after tax were down 10%, from A$81.3-million to A$73.4-million.

The miner told shareholders that the half-year results were impacted by lower head grades at the Mt Magnet operation, in Western Australia, and a group-wide higher cost profile, which echoed cost increases across the resources industry.

The lower grade, combined with the direct and indirect cost impacts of Covid-19, particularly in Western Australia where borders remained closed, were major factors behind an increase in the company’s all-in sustaining cost to A$1 473/oz, up 17% on the previous corresponding period.

“The first half of the year has been a challenging one for Ramelius and for the mining industry generally due to the Covid-related labour shortages. The welfare of our staff, our contractors, their families, and the communities that we work in has been our priority. We have instigated a number of measures to help manage any potential transmission of Covid-19 and we will maintain this focus as the Omicron strain begins to spread in Western Australia,” said Ramelius MD Mark Zeptner.

“Our company’s profitability was impacted by lower head grades, particularly at Mt Magnet, where the high grades seen in the prior corresponding period from mines such as Stellar and Shannon were replaced with baseload feed from the lower grade, yet still cash positive, Eridanus openpit. We look forward to the completion of the development works and the beginning of underground operations and meaningful high grade ore production from Penny early in 2023.”

Zeptner said that the inability to deliver planned tonnages of high-grade ore from Tampia and Marda also impacted the bottom line. However, he noted that this was a timing issue only as the high-grade run-of-mine stocks at both mines will get processed over the coming year.

By way of future cashflows, this will begin to realise some of the A$147-million invested in inventories on hand at the end of the period.

“Despite the higher costs and slightly lower gold production, our underlying Ebitda margin remains very strong at just over 50%. This compares well with our peers and highlights that our business model remains robust.

“The acquisition of Rebecca, our commitment to exploration and ongoing development opportunities at both production centres, combined with the strength of our balance sheet, will allow us to continue both organic growth and the assessment of external growth opportunities as they arise,” said Zeptner.