Antam?s Q1 sales up despite production decrease

JSX-listed state nickel and gold miner PT. Aneka Tambang Tbk. (Antam) reported on Friday that its first quarter 2005 total revenues increased 6% to Rp600 billion (US$=Rp.9,500) compared to 1Q04 due to higher prices as sales volumes of most products decreased.

The nickel division, which consists of ferronickel and nickel ore, contributed 76% of total sales and remained the largest contributor. Revenue from nickel division rose 4% to Rp458 billion despite lower ferronickel and nickel ore sales. Revenues from the gold division, which includes refinery services, increased by 19% to Rp104 billion, contributing 17% to Antam?s revenues.

Antam produced 1,326 tonnes of contained nickel in ferronickel in the first quarter of 2005, a 14% decrease compared to the previous quarter and a 31% decrease compared to the same quarter last year. The reduction was due to the shut down of FeNi II smelter after Antam detected abnormal metal levels measured against reference dimensions in the furnace and higher than normal hearth thermocouple temperatures during the commissioning period after the overhaul of the smelter. The shut down of FeNi II is expected to last five to six months, with FeNi II beginning commercial operations at the end of August 2005.

To offset the loss of production and revenue, Antam said it would increase its volume of toll smelting with Pamco from 150 tonnes to 600 tonnes, as well as boost its high grade nickel ore sales by 400,000 tonnes.

Due to the shut down of FeNi II, Antam has lowered the ferronickel production target, including toll smelting, by 27% to 7,400 tonnes, from 10,150 tonnes.

Average selling price of ferronickel rose 3% compared with previous quarter or 7% compared with the same period last year to US$6.56 per lb. Production of high grade nickel ore decreased 29% to 586,328 wet metric tons (wmt), compared to previous quarter and was 23% lower compared to the same period last year as Antam closed the Gebe nickel mine at the end of the 2004. Antam said it planned to open a new nickel mine called Mornopo to replace Gebe in the middle of 2005. Production of high grade nickel ore from Gee and Pomalaa decreased by 11% each to 225,886 wmt and 152,348 wmt respectively inline with lower ore feed requirements as FeNi II was shut down for an overhaul. Meanwhile, increased production of Low Grade Saprolitic Ore (LGSO) by 43% compared to previous quarter kept Antam?s total limonite production rose by 31% to 310,910 wmt.

Antam also reported that gold production in 1Q05 was 49% lower compared with the previous quarter, reaching 563 kg due to the soft wall conditions at the Ciurug veins. The conditions caused Antam to shift excavation to a lower grade area of 7 grams per ton (gpt) compared with previous area of 12.48 gpt. Antam expects to reinitiate mining at the higher grade area after reinforcing the soft wall tunnels. Lower gold production is also due to maintenance on the ball mills at the Pongkor gold factory.

However, Antam?s gold sales exceeded production as Antam reduced its inventory. Revenue from gold reached Rp87 billion or 41% lower compared to 4Q04. Revenue from gold, however, was 18% higher compared to the same period last year inline with higher gold price. In 1Q05, the average selling price of gold reached US$430.79 per t.oz., 2% lower compared to the previous quarter but 6% higher compared to 1Q04. (alex)