Global Ferronickel Holdings, Inc. announces Q2 2016 financial and operating results Manila, August 15, 2016 – Global Ferronickel Holdings, Inc. (GFNI) (PSE: FNI), the second largest nickel producer in the country and the largest single lateritic mine exporter in the world, today announced its unaudited financial and operating results for the three months ended June 30, 2016.
Highlights for the second quarter include the granting of ISO Certification 14001:2015 Environment Management Systems Certification for its operations in Surigao del Norte and the successful implementation of cost-reduction measures to strengthen the Company’s position as one of the lowest cost producers in the country. Unfavorable weather conditions, which affected production and loading operations, and the Company’s conscious decision to withhold shipments of higher grade nickel ore in H1 2016 in anticipation of higher prices in the second half of the year have led to lower volumes. The Company incurred a net loss of P97.9 million for the quarter, compared to a net income of P417.0 million for the same period last year. For the six months ended June 30, 2016, the Company incurred a net loss of P281.9 million compared to a net income of P153.0 million for the same period last year.
“Notwithstanding the challenging conditions in the second quarter of 2016, we are positive about FNI’s prospects. In the face of tough market conditions, we demonstrated our ability to reduce costs and achieve better production efficiencies. Also, we obtained ISO Certification, which is testament to our commitment to preserve and protect the environment. These achievements place us in a strong position to do much better as selling prices recover,” said Atty. Dante R. Bravo, President of FNI.
Total operating costs decreased by 35.2% to P839.5 million from P1,295.9 million from the same period last year due to lower production. However, the Company reduced cash costs per WMT of ore sold by 6.8% to US$11.19 per WMT from US$12.00 per WMT for the same period last year due to the Company’s efforts to rationalize cost and achieve better operational efficiencies.
During the three month period, a total of 1.04 million wet metric tons (WMT) of nickel ore was shipped, comprising 0.88 million WMT of low-grade nickel ore and 0.16 million WMT of medium-grade nickel ore. There was no shipment of high-grade nickel ore. For the same period last year, a total of 1.56 million WMT of ore was shipped, comprising 0.22 million WMT of low-grade nickel ore, 1.28 million WMT of medium-grade nickel ore and 0.06 million WMT of high-grade nickel ore.
For the second quarter, the Company realized an average selling price of US$13.35 per WMT compared to US$26.15 per WMT last year due to weak nickel prices. Nickel prices, during the period, averaged US$8,844 per ton on the London Metal Exchange. Since the end of the quarter, nickel price has rallied to recent highs of around US$10,600 per ton. As a result of lower shipments and weaker average selling prices, total revenue fell to P663.2 million compared to P1,793.1 million for the same period last year.
“I am heartened to see nickel price has improved recently. Key economic indicators for China, which is the world’s largest consumer of nickel ore and accounts for nearly half the world’s nickel consumption, also continue to show stabilization. We have strong ongoing commitments from major industrial conglomerates in China. With the repeat and long term demand from these clients, we expect better performance in the second half as the Company enters its peak production period,” added Mr. Bravo.
In addition, from August 4 to 6, 2016, the DENR Audit Team comprising representatives from the central and regional offices, Mines and Geosciences Bureau (MGB), Environmental Management Bureau (EMB) and NGOs, conducted the mining audit on FNI. The scope of the DENR Audit included Tenement, Mine Environmental Management, Safety and Health and Social Development for the year 2015 up to the first semester of 2016. There was a rating sheet for each audit category and rating score was awarded based on performance criteria set out on the rating sheet. The points awarded depends on the approved program/s, periodic reports submission/s, percent of accomplishment vs approved program/s, and taxes paid, among others.
“The feedback received from the authorities was that the Company was excellent in documentation, reportorial and permitting compliance. We also received favorable feedback on our rehabilitation, slope stabilization and greening programs. They also took notice of our plant nurseries where we have grown more than 500,000 seedlings of varied endemic species. All these are a result of our serious commitment to compliance in all aspects of our mining operations,” concludes Mr. Bravo.
