Marcventures expects net profit to reach P1B in ’14

SCREENGRAB from www.marcventuresholdings.com

Nickel mining firm Marcventures Holdings Inc. expects to end this year with about P1 billion in net profit, matching last year’s level, as its Cantilan mine in Surigao del Sur rekindled operations after a two-month suspension.

The two-month suspension of both Cantilan and Carrascal mines of Marcventures’ Marcventures Mining and Development Corp. (MMDC) could easily translate to about P500 million in foregone income right at the peak of nickel prices, Marcventures executive vice president Isidro C. Alcantara Jr. said in an interview.

But now that the suspension order on Cantilan had been lifted, Alcantara said, MMDC could still make 50 shipments of nickel ore to China and other overseas markets for the full year, allowing the company to meet its goal of booking a net profit of P1 billion for 2014.

Alcantara said this would be feasible even if MMDC’s other mining area in Carrascal were to remain dormant. Recently, Marcventures disclosed that the suspension order on Cantilan had been lifted by mining regulators. There is no word yet on when the suspension order on Carrascal will be lifted.

“Carrascal will be a big benefit because cost [of operations] in Carrascal is lower than in Cantilan,” Alcantara said, noting that the company would only need to haul nickel ore for 10 kilometers from Carrascal, unlike Cantilan which is 23 kilometers away from the port.

But whatever the outcome on Carrascal, Alcantara said MMDC would work double-time this second semester to meet its full-year goal. The company has the authority to extract as much as three million weight metric tons (WMT) of nickel ore this year, the bulk of which will be sourced from Cantilan alone.

In the first six months of the year, Marcventures posted a net profit of P145.74 million—only half of the P304.23 million posted in the same period last year, the company reported in its latest regulatory filing. In the second quarter alone, its net profit plunged to P95.17 million, from last year’s P330.92 million, due to the suspension of the two mining projects.

On April 23, the Mines and Geosciences Bureau (MGB) ordered the suspension of MMDC’s two mines in Surigao for alleged violations. But Marcventures refuted allegations that MMDC had failed to maintain environmental mitigation measures in the Cabangahan area, as well as findings of “unsystematic method of extraction” in Pili.

On the allegation that MMDC was conducting mining operations outside the approved mining area, Marcventures argued that MMDC had “validly obtained all the necessary permits from the MGB.”

During the two-month suspension, MMDC was able to sell 579,781 WMT of nickel ore equivalent to 11 shipments to China. It was 26 percent lower than the 787,961 WMT, or 14 shipments, reported in the same period last year.  Doris C. Dumlao