TORONTO (miningweekly.com) – Base metals miner Mercator Minerals, which owns and operates the Mineral Park copper/molybdenum/silver mine, in Arizona, this week said second-quarter net profit fell 60% year-on-year to $8.8-million, down from $22.1-million, as copper and molybdenum prices fell and costs crept up.

The adjusted net loss for the three months ended June 30, widened to $10.7-million, or $0.03 a share, compared with an adjusted loss of $3.5-million, or $0.01 a share. Analysts had, on average, expected adjusted earnings of $0.01 a share.

For the period under review, Mercator reported 5% higher revenues at $64.2-million, mainly owing to shipping 35% more copper at 10.9-million pounds and 12% more molybdenum at 2.8-million pounds.

The increase in revenues was partially offset by 11% lower realised prices for copper at $3.05/lb and molybdenum prices being 18% lower at $10.64/lb.

The cash costs of production, on a co-product basis, were 17% higher year-on-year for copper, at $2.75/lb, and 3% lower year-on-year for molybdenum at $10.46/lb. On-site operating costs of $10.75/t milled were 8% higher, mainly as a result of mining in harder ore sections of the pit, resulting in lower throughput rates and higher operating costs.

For the rest of the year, Mercator planned to mine a higher portion of ore from the Turquoise and Ithaca pits, where grades are higher.

The company had also reduced its 2013 capital expenditure programme to $5-million, down from $13.7-million, mainly as a result of deferring the construction of its $5-million pebble crusher.

Laurentian Bank Securities Equity Research mining analyst Christopher Chang pointed out that Mercator had unrestricted cash of only $7.1-million at the end of the quarter, below the forecast of $8.5-million.

“Given the ongoing decline of spot molybdenum prices, currently at about $9.33/lb, we estimate that the company could seek additional capital of about $20-million within the next three to six months,” he said in a note to clients on Tuesday.

Mercator, in June, released updated reserve and resource estimates for Mineral Park, saying that, despite the slight decline in both categories, the operation was assured of a mine life of at least 20 years.

At a 0.2% copper-equivalent cutoff grade, the operation had proven and probable sulphide reserves of 369-million tons grading 0.12% copper, 0.037% molybdenum and 0.084 oz/t silver, containing 877-million pounds of copper, 273-million pounds of molybdenum and 31-million ounces of silver.

The updated reserve represented a decrease from the January sulphide reserve estimate of 389-million tons grading 0.14% copper, 0.04% molybdenum and 0.08 oz/t silver, containing 1.1-billion pounds of copper, 310-million pounds of molybdenum and 31-million ounces of silver.

The company said the drop in tonnage and grading for both its copper and molybdenum reserves was the result of mining higher-grade supergene material over the past six years, the lower copper grade in the transition zone and interpolation using a hybrid dataset incorporating drill holes and blast holes to model the new mineral resource.

The new mineral reserve estimate also incorporated updated operating costs, metal recoveries and metal prices of $2.60/lb for copper and $9.65/lb for molybdenum.