Canada-based mining company Quadra Mining Ltd. (QUA.TO) Friday reported a net loss for the fourth quarter compared to a profit in the year-ago period, hurt by a write-down related to the company's Malmbjerg molybdenum project in Greenland and a sharp fall in copper prices. For fiscal year 2009, the company forecasts lower copper and gold production than last year.
Fourth-Quarter Results
The company's net loss for the fourth quarter was US$126.08 million, or US$1.94 per share, compared to net earnings of US$5.49 million, or US$0.14 per share, in the year-ago quarter.
The loss for the latest quarter reflected an impairment charge of US$95.68 million, or US$1.52 per share, for the Malmbjerg mineral property due to the recent declines in molybdenum prices, the weak credit and financial markets, and the suspension of activities at the project. The results for the quarter were also negatively impacted by the significant decline in copper price across the quarter.
Copper price fell to US$1.33 per pound on December 31, 2008 from US$2.91 per pound on September 30, 2008.
The global demand for copper, particularly in China, coupled with the inability of the copper industry to increase supply led to a substantial increase in copper price between 2006 and mid 2008. However, the global credit and consumer confidence crises and the resulting global economic downturn led to a collapse in the price of copper.
Quadra's revenues from concentrate sales for the quarter were a negative US$7.06 million compared to positive revenues of US$81.67 million in the same period last year.
The negative revenues for the latest quarter were a result of negative provisional price adjustments of US$85 million, which exceeded the initial provisional revenues of US$78 million recorded on shipments during the quarter.
The company recorded an operating loss for the quarter of US$93.42 million, compared to operating income of US$15.09 million in the year-ago period.
The operating loss for the quarter includes negative provisional pricing adjustments of US$65 million related to third-quarter sales, and a US$15 million leach pad inventory write down at Carlota.
Fiscal Year 2008 Results
For fiscal year 2008, Quadra's net earnings were US$38.61 million, or US$0.60 per share, down from US$134.55 million, or US$2.72 per share, a year ago.
Net earnings for the year were hurt by the substantial fall in copper prices in the second half of the year, particularly in the fourth quarter, in addition to the non-cash write down for the Malmbjerg project that was recorded in the fourth quarter. The results for the year also included a gain of US$38 million related to the company's copper put options.
Quadra's revenues from concentrate sales for the year declined to US$487.50 million from US$493.85 million in the previous year. The company mines primarily from its Robinson mine, near Ely, Nevada.
Copper production in the year was 159.7 million pounds, up from 131.9 million pounds in the prior year. Gold production increased to 137,620 ounces from 108,119 ounces in 2007. The company noted that it met its 2008 revised production guidance of 160 million pounds of copper and 130,000 ounces of gold.
Outlook
The company projects gold production to be lower in 2009 than in the prior year due to anticipated lower gold grades in the Kimbley and Wedge pits.
For fiscal 2009, Quadra expects annual production of 140 million pounds of copper and 100 thousand ounces of gold.
In February, Quadra had announced the proposed acquisition of Centenario Copper Corp. (CCT.TO) via a plan of arrangement. Upon closing of the transaction, each share of Centenario would be exchanged for 0.28 Quadra shares, resulting in the issuance of approximately 14.4 million Quadra common shares.
Stock Quotes
In Friday's regular trading session, QUA.TO is trading on the Toronto Stock Exchange at C$3.86, up CS$0.27 or 7.52% on a volume of 0.12 million shares. In the past 52 weeks, the stock has been trading in a range of C$1.97-C$27.00.
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