Mining company sees profits drop 32% to €6.3m

PRE-TAX profits at Galmoy mines in Co Kilkenny last year decreased by 32% to €6.3 million as revenues tumbled by 60%, new figures show.

Production at the mine was due to cease in June 2009 with the loss of 220 jobs because of the fall in the price of zinc, making the mine economically unviable.

However, zinc prices then climbed significantly and the owners, the Lundin Corporation, announced mining would continue.

Revenues at Galmoy Mines Ltd last year dropped by 60% from €26.4m to €10.6m.

According to the directors’ report, although Galmoy Mines Ltd entered a new contract to mine the ore with Lundin subsequent to the closure announcement, rehabilitation works at the mine have begun and are expected to continue until 2013 with monitoring activities thereafter to monitor the wind-down of the operation.

The company’s operating profit last year decreased from €9m to €5.06m.

Profits were boosted by the sale of a mill for €1m, resulting in the pre-tax profit of €6.3m.

The figures show that the numbers employed by the company during the year reduced from 81 to 45, with staff costs decreasing from €5.4m to €3.3m.

Some €1m of the €3.3m in staff costs went towards site-closure payroll costs.

The company incurred €3.6m in site restoration costs in 2010. It has a further €4.4m to fund the remainder of the restoration works and expects to complete the works in the next year.

At the end of December last the company had accumulated losses of €22m.

According to the accounts, “the company is in a net liability position at the end of the year as a result of a significant loss in 2008 owing to decisions relating to the costs of closing down the mine, together with writedowns of assets”.

It adds: “The company’s ultimate parent has committed to fund this net liability position in order to wind down the company’s operations once mining has ceased and rehabilitation works have been completed.”

The €41m loss sustained in 2008 followed the company recording pre-tax profits of €22m and €43m in 2007 and 2006.

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