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CNMC posts first annual loss since 2011 on Covid-19 fallout

SINGAPORE (THE BUSINESS TIMES) – CNMC Goldmine holdings reported a net loss of US$2.6 million (S$3.5 million) for the second half of the fiscal year ended December 2020, reversing from a net profit of US$2.2 million in the year-ago period.

This caused the Catalist-listed firm to report a loss of US$3.5 million for FY 2020 versus a net profit of US$4.4 million in the previous year. This marked the group’s first annual loss since 2011.

Revenue for H2 fell 28.4 per cent to US$13.4 million from US$18.7 million in the corresponding period last year. The group noted that despite an increase in average realised gold price, there had been a significant drop in production and sales volumes of fine gold in H2 and FY 2020.

CNMC said its output fell by more than half to 13,046 ounces of fine gold from 28,137 ounces in FY2019 due to the Covid-19 pandemic, which forced the group to stop all onsite activities in line with Malaysia’s lockdown measures from March 18, 2020 to May 5, 2020. There were also lingering disruptions thereafter, said CNMC.

The company had also required time to tune up its machinery and equipment after the hiatus, and the delayed commencement of underground mining had also contributed to the fall in production.

With the reduced output, the company’s all-in cost of production for each ounce of gold rose to US$1,650 in FY 2020 from US$1,166 in FY 2019. In H2 FY 2020, the cost rose to US$1,800 from US$1,334 in H2 FY 2019.

Apart from lower revenue, an impairment allowance of US$3.84 million for certain exploration and evaluation assets also contributed to the loss for the fiscal year. The impairment, which is non-cash in nature, stems from some uncertainties surrounding the operations of subsidiary company, CMNC Pulai Mining Sdn Bhd, which owns a brownfield project in Kelantan that can potentially yield gold, feldspar and iron ore.

These include uncertainties over whether some of CNMC Pulai’s expired exploration and mining licences could be renewed, as well as some operational and regulatory issues and challenges encountered by CNMC Pulai from time to time.

Without this impairment, CNMC said it would have posted a net loss of US$950,000 for FY 2020.

Looking ahead, CNMC said it will focus on underground mining in its bid to revive growth. It added that December 2020 was the only month in which the company had produced gold utilising ores from its flagship Sokor gold field, that accounted for about 46 per cent of its output in H2.

For H2 FY 2020, CNMC had produced and sold a total of 6,824.43 ounces of fine gold, up from 6,221.87 ounces in the first half of the year.

The company said discussions with the relevant authorities on the building of a floatation plant at Sokor for the production of silver, lead and zinc are still ongoing. These industrial metals will diversify the group’s gold-centric portfolio.

Said CNMC’s chief executive Chris Lim: “The increase in production since December 2020 is encouraging. While we would have liked to start mining underground much earlier but we are off to a good start nonetheless. We will strive to build up the momentum in the months ahead and make up for lost ground after a subpar performance last year.”

Shares in CNMC closed flat at $0.22 on Friday.

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