Marcventures sees profit surging to P1B

MANILA, Philippines - Publicly-listed Marcventures Holdings Inc. said it expects to hit around P1 billion in net income next year based on projected high-grade nickel ore sales of at least 700,000 wet metric tons.

For this year, the company is forecast to post net earnings of P384 million.

Based on a research report conducted by Abacus Securities, Marcventures shipped approximately 110,000 WMT of high-grade nickel ore worth around P300 million in the third quarter this year.

Aside from this, the company has pre-sold the rest of its 2011 high-grade nickel ore production for shipment in the last quarter of 2011.

In 2012, with a full year of operations, the company projects at least 700,000 WMT of high-grade nickel ore sales, which could fetch a net income of P968 million based on a conservative estimate of $55 per WMT. This is equivalent to an earnings per share of 53 centavos.

According to Abacus, this trend will allow Marcventutures to expand its operations and increase its deliveries to up to one million tons worth of high-grade nickel ore shipments on an annual average by 2013.

In a separate industry report about nickel, a global financial services consultancy firm says that nickel pig iron (NPI), a Chinese invention, has gained wide acceptability as a substitute for primary nickel as a raw material for stainless steel manufacturers.

To meet burgeoning demand for NPI, Chinese NPI plants are willing to pay higher prices, especially for high-grade nickel ore, which abounds in Marcventures’ 4,799-hectare mining property area in Surigao del Sur.

China, one of the world’s premier markets for nickel ore, sources most of its nickel resource from the Philippines and Indonesia. But Indonesia is seen likely to ban the sale of nickel ore exports by 2014 and this will drive up demand for Philippine nickel ore and raise prices.

The Abacus report also noted that the current area explored by Marcventures so far is only 120 hectares, representing only 2.5 percent of its total mining property, of which only 15 hectares or 0.3 percent of the total area is actually being mined.

With cash flow from current operations, Marcventures is expected to embark on a major exploration program in highly prospective areas around its current mine site to boost its nickel ore resource base.

“The first two nickel ore shipments carried out by Marcventures had grades of 1.85 percent and 1.83 percent, respectively, and commanded premiums over the spot price of 1.8 percent ore,” the report said.