Nickel Asia profit jumps 5-fold

By Zinnia B. Dela Peña (The Philippine Star) Updated December 18, 2010

MANILA, Philippines - Nickel Asia Corp. said its net income reached P1.34 billion in the nine months ending September 2010, an increase of more than five-fold over the P235.1 million recorded in the same period last year.

In a disclosure to the Philippine Stock Exchange, Nickel Asia said revenues, primarily from the sale of nickel ore, jumped 85.8 percent to P5.87 billion from P3.16 billion, mainly due to higher volume of nickel ore sold and higher nickel prices.

The company sold 5.78 million wet metric tons during the period, up from 4.84 million wet metric tons.

The price of nickel this year averaged $9.49 per pound in its shipments of saprolite ore to Pacific Metals Co. of Japan and limonite ore to the Coral Bay nickel processing plant adjacent to its Rio Tuba mining operations as against an average realized price last year of $5.67 per pound of payable nickel.

With respect to the company’s shipments of low-grade saprolite and limonite ore to its China customers, the weighted average selling price this year amounted to $17.22 per wet metric ton of ore sold as against $12.20 per wet metric ton of ore sold in 2009.

Nickel Asia has a majority interest in two nickel mines — Rio Tuba Nickel in Palawan and Taganito in Surigao del Sur, and Cagdanao Mining in Dinagat Islands. It also has a minority interest in the country’s first downstream nickel processing plant, the world-class Coral Bay nickel HPAL facility, in partnership with Sumitomo Metal Mining of Japan.

Coral Bay has been in operation since 2005 and sources all of its limonite ore requirements from the Rio Tuba mine.

On Nov. 10, 2010, the company made an investment of $102.4 million for a 22.5- percent equity interest in the country’s second downstream nickel processing plant, Taganito HPAL nickel, also in partnership with Sumitomo.

The bulk of the proceeds of Nickel Asia’s recently concluded initial public offering were used to fund a majority of this investment. Following a groundbreaking ceremony last month, construction of the plant adjacent to the Taganito mining operations has started.

Once this new plant becomes operational in mid-2013, Nickel Asia will source all of its limonite ore requirements from the Taganito mine. At a projected cost of $1.3 billion, the construction of the country’s second downstream nickel processing plant represents the single largest investment in the Philippine metals sector.