ORE profit down on high costs
ORIENTAL Peninsula Resources Group Inc. (ORE) posted a 4-percent drop in net income in 2012 amid higher production costs, “unstable” foreign exchange rates and “erratic” nickel prices.
In a report to the Philippine Stock (PSE), ORE said its net income dropped to P475 million from P498 million in 2011.
Sales of nickel-rich ore nearly doubled to P2.115 billion in 2012 from P1.11 billion in 2011. However, production costs and expenses soared 171.47 percent to P1.68 billion in 2012 compared to P631.17 million in 2011.
“The company is still on expansion mode having started commercial operations only in the second quarter of 2011. These costs are necessary to effect construction and development of the mining sites,” said ORE chair Caroline Tanchay.
Other increases in costs have also been tagged to higher production costs, depreciation, depletion and amortization, excise and other taxes, finance cost and other administrative expenses. “The unstable foreign exchange rates have also affected our bottom line, as well as the erratic prices of nickel at the London Stock Exhange (LSE),” added Tanchay.
The company attributed part of the profit drop to the 10 percent change in the peso-dollar exchange rate to 40.5 per greenback in 2012 from an average of 43.5 to a dollar in 2011.
Nickel price hit a high of $22,000 per ton to a low of $15,000.
China remains ORE’s biggest market although the company also exports to Japan and Australia, Tanchay said.