WEAKER commodity prices have hurt PanAust’s (ASX:PNA) half year profit, falling 28 per cent compared to the previous year.
The gold, silver and copper miner recorded attributable profit after tax of $28.1 million in the six months to June 30, down from $38.9 million in the previous period.
An increase in copper and silver sales offset the decline in gold, with revenue up four per cent to US$338.5 million.
Managing director Gary Stafford says PanAust’s Phu Kham project remains competitive in the face of the downturn.
“The company’s operations delivered strong cash flow despite the lower average prices for all metals and the outlook is for improved operating performance in the second half of 2014,” Stafford says.
“PanAust has invested significant capital at the Phu Kham operations over the past two years and is starting to reap the benefits through higher processing rates and improving metallurgical recovery rates which, together with lower sustaining capital, are resulting in improving cash flow.
“The inclusion of ore sourced from the KTL satellite deposit would further enhance production and cash flow.”
Copper production at Phu Kham is expected to increase to 90,000 tonnes and gold to 80,000 ounces, by 2018 and 2019 respectively.
Stafford says operating performance is expected to improve in the second half of 2014, delivering higher grades and recoveries of copper and gold.
Earnings before interest, tax, depreciation and amortisation (EBITDA) is tracking above guidance at US$124.4 million.
The full year EBITDA guidance is between US$200 million and US$225 million.
The company is set to acquire an 80 per cent stake in the Frieda River Copper-Gold project in Papua New Guinea on August 25.
PNA will pay an interim dividend of $0.03 per share in October.
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