LionOre roars in q4

With nickel prices soaring and record production out of the Tati nickel operation, LionOre Mining International (LIM-T) saw its fourth-quarter earnings increase eight-fold to US$29.8 million during the last three months of 2003.

That translates to US16 per share, and compares with year-ago earnings of US$3.6 million, or US2 per share. The recent fourth-quarter earnings include a US$3.1 million loss realized on certain nickel hedges. LionOre also notes that the earnings came amid the adverse effects of strengthening foreign currencies in Australia, Botswana, and Canada.

Revenue between the two periods tripled to US$127.3 million, while cash flow from operations soared to US$17.2 million from just US$861,000 in the corresponding period of 2002.

In all, the fourth-quarter earnings represent more than half the earnings piled by LionOre during 2003.

LionOre attributes its solid fourth-quarter results to the price of nickel, which jumped to US5.62/lb. during the period, up from US$3.22/lb. in the corresponding period of 2002. The company also got record production from the 85%-owned Tati nickel project in northeastern Botswana.

Payable nickel sales at Tati came to 3,360 tonnes; the realized an average price was US$5.59 per lb. to generate revenue of US$47.5 million. Cash costs came in at US$2.52 per lb.

LionOre says assembly of the Activox demonstration plant at Tati will begin later in March, with testing over the balance of the year. A decision whether to build a full-scale plant will follow. If it goes ahead, the new plant would boost production to 18-19,000 tonnes of payable nickel per year at significantly reduced costs.

In Western Australia, Emily Ann produced 1,878 tonnes of payable nickel at US$2.60 per lb. Quartely sales totalled 3,796 tonnes, and included 1,637 tonnes produced in the third quarter. Those tonnes were not sold previously owing to the Inco strike.

Turning to gold, the Thunderbox mine in the Northeastern gold fields of Western Australia, produced 39,498 oz. at US$213 apiece. Since the end of October 2003, LionOre’s share of Thunderbox production was 100%, a result of its merger with Dalrymple Resources, which had a 40% stake. Quarterly gold sales from the mine came to US$14 million.

At quarter’s end, LionOre had US$45 million in cash, and long-term debt reduced had been reduced to US$77 million from US$102 million at the end of 2002. That includes US$10 .5 million in debt absorbed via the merger with Dalrymple, and US$7 million in borrowing to build the Activox demonstration plant. LionOre plans to repay at least US$35 million worth of debt in 2004.