Nickel sulphide producer Mincor Resources [ASX:MCR] released an operational guidance update, intending to inform shareholders on its Northern and Southern Operations involving the BHP Kambalda Nickel Concentrator and related works and offtakes.
What really happened was the company admitted it had to withdraw its guidance from three weeks ago, when BHP refused to go along with its plans.
The clean energy materials producer saw shares fall 4% by midday, worth $1.44 at time of writing.
Over the last month, the nickel minerals producer has jumped nearly 17%, and yet, over the past 12 months, it’s suffered a 33% deficit to share value.
In its sector, MCR is down 32% on the industry 12-month rolling average and 28% down in the wider market, respectively:
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Mincor and BHP talk off-spec product
Mincor shared the operational guidance update today, involving BHP’s Kambalda Nickel Concentrator, in which Mincor provides combined ore from a blend of its Northern and Southern operations.
These operations produce a nickel-to-arsenic ratio, which has been consistently delivered to BHP as off-specification product, including during ramp-up.
Mincor says that BHP has so far been accepting the off-spec product, and both companies have been working together to explore better methods to manage the product.
To this end, Mincor has said that it has set up discussions with BHP regarding amendments to off-take terms and flexibility, in order to improve the outcomes and help deliver 100%-mined ore to BHP, but is yet to find its endeavours successful.
The company said that BHP gave its answer yesterday and had asserted it would not agree to amend the off-take agreement.
This has forced Mincor to withdraw its initial, now thrown by uncertainty regarding any future acceptance of the off-specification product by BHP and the overall incomplete matter of a solution.
The company concluded with:
‘Mincor will continue to deliver on-specification ore to BHP and is conducting work to improve orebody knowledge to enable optimisation of its forward mine plan to consistently deliver on-specification product. Mincor will stockpile any ore that BHP indicates will not be accepted due to product specification requirements, allowing for blending with other Mincor ore sources at a subsequent date.’
Mincor’s outlook
Mincor’s unstable situation to continue supplying lower-quality standard products to BHP may come at some cost to the company, even as the nickel producer strives to offload products that do meet guidelines.
With this information brought to light, it will be interesting to see what comes of the recent takeover bid offer by Wyloo Metals, who already owns 19.99% of Mincor.
A couple of weeks ago, Wyloo offered to acquire Mincor at $1.40 a share — totalling $760 million — made at an offer price that was a 35% premium to Mincor’s previous trading price at the time, which was at a considerable low, compared with bigger battery metal development companies in the past (ie: Rio Tinto, BHP, and Albemarle).
Mincor posted a $54.7 million loss for the half year ended 31 December.
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For Money Morning
