Asa Resources closes Harare,Joburg admin offices as nickel production rises
HARARE – ASA Resources has closed the Harare and Johannesburg administrative offices as part of a wider group restructuring exercise which seeks to ultimately lower operational costs.
Group Chief Executive Officer Yat Hoi Ning in a quarterly update for Q2 ended 30 September 2016 (Q2 FY2017) says the group is continuing with its efforts to streamline functions, centralise procurement and eradicate duplication and this has seen certain responsibilities moving from mine to corporate level and vice versa, resulting in a pooling of responsibilities and a more agile management structure.
“… and in this quarter we further rationalised our African administrative function by closing Johannesburg and Harare, bringing important duties closer to our operating mines in Bindura,” he said, adding that streamlining the UK and Hong Kong offices is more or less complete.
Ning said the Group’s corporate overhead is now at an all-time historical low of approximately $3m per annum (excluding project exploration and licensing fees).
“Whilst I’m pleased with this hard-earned performance, we must be constantly vigilant about controlling costs and to remove unnecessary waste. A low-cost base will benefit us when commodity prices start to rise again,” he said.
According to Ning, the reorganisation of the Group has also helped drive down costs at mine level and the executive believe that opportunities remain to impact further on C1/C3 costs, especially at Freda Rebecca.
During the quarter, C1 cash costs at Freda were 5% lower at $944/oz, while All-in sustaining C3 costs also went down 3% to $1,115/oz compared to Q4 FY2016 of $1,153/oz.
Ning said when considering that the combined AISC annual costs at the group’s operating mines are in the region of $120m, any potential savings could be significant
In terms of gold production at Freda, tonnes mined increased 13% to 363,082 t up from 321,630 t in prior quarter as tonnes milled decreased 4% to 262,633t. Recovery rate also increased 2% to 84% from 83% while C1 cash costs were 5% lower at $944/oz.
As a result, gold sales were 10% higher at 15,904oz in Q2 FY2017 compared to Q1 FY2017 at 14,463oz while average head grade increased 16.3% to 2.28g/t from 1.96g/t.
Freda Rebecca’s original plant design has the capacity to produce 90,000/oz to 100,000/oz per annum and the Group is targeting to steadily increase gold sales towards this long-term target.
Ning said described overall performance at Freda Rebecca as steady in Q2. He said the new replacement LHD arrived on site in the latter part of the quarter and helped to increase tonnes mined by 13%, however a cracked journal on Mill 1, in late August, slowed throughput and contributed to a decrease in tonnes milled.
Meanwhile, BNC at Trojan registered improved nickel in concentrate production at 1.866million tonnes from $1.555million tonnes in prior comparable period. The 20% increase in production is attributable to improved average head grade and recoveries.
Head grade was 15% higher at 2.016% compared to Q1 1.763% while recovery was 2% higher at 89.1% from 87.0% in prior quarter.
During the quarter, nickel sales volume was 32% higher at 1,971t compared to Q1 FY2017 at 1,493t while C1 cash costs for nickel in concentrate decreased 17% to $4,782/t from $5,736/t in Q1.
All-in sustaining C3 costs of nickel in concentrate also decreased 21% to $5,151/t compared to $6,489/t in Q1.
The decreases in both C1 and C3 costs are attributable to an increase in overall production, cost control measures and a 15% higher head grade.
The average net realised nickel in concentrate price improved to $6,668/t from $5,728/t, reflecting a 16% increase in global nickel prices this quarter.
The Group expects production to improve in Q3 FY 2017 onwards, as the availability of equipment gradually improves.
During Q2, mined tonnage increased to 104.018 mln tonnes compared to prior quarter level of 97. 689 mln tonnes. Resultantly, milled tonnage closed the quarter at 103.857 mln tonnes up from 101.433 mln tonnes in Q1.
The Group says the smelter restart project is progressing well and that it is in the process of exploring discussions to enhance toll income over the medium-term once the smelter becomes fully operational next year.
The Group also says having its own refinery will provide it with full control over the value chain whilst enhancing income.
“A feasibility study to re-start part of the refinery is underway and it remains our medium-term ambition to re-establish BNC as the only fully integrated nickel producer in Africa.”