Profits at mining firm down 40%

Pre-tax profits at Galmoy Mines in Co Kilkenny fell by 40% to €11.23m in 2012.

Accounts recently filed by Galmoy Mines Ltd show that the firm sustained the sharp drop in profits after revenues fell by 30.5% from €28.7m to €19.9m in the 12 months to the end of Dec 31, 2012.

However in the accounts, the directors state that towards the end of the period, the company’s ore extraction activities ceased and the final delivery of ore for processing at Lisheen Mines occurred at the end of Nov 2012.

The directors state: “The company continues to realise revenue in relation to the milling of ore by Lisheen Milling Ltd, from stock already mined, which is expected to continue throughout 2013.”

The report adds: “Rehabilitation works at the mine site continued through 2012 and are expected to conclude in 2014 with monitoring activities continuing thereafter to effect wind-down of the mine.

“The financial statements include provisions for costs related to the impact of the mine closure but have not been prepared on a wind-up basis, as the company continues mine rehabilitation and is not expected to be liquidated until full rehabilitation works and aftercare management are completed.”

The directors point out that the parent company, the Canada-based Lundin corporation has committed to fund any excess costs arising to the extent necessary to affect an orderly wind-down of the operation.

The figures show that the firm’s accumulated profits at the end of Dec 2012 totalled €7.8m with the firm’s cash at hand and in bank declining from €8.1m to €4.3m.

A breakdown of the firm’s costs show that €3.8m was spent on mine services and administrative expenses along with a restructuring charge of €191,000 and a €408,000 increase in site remediation.

Numbers employed by Galmoy in 2012 reduced from 49 to 30 with staff costs down from €3.8m to €3.5m. The figures show 26 staff was engaged in mine development and production along with four engaged in management and administration.

The staff costs include €2.65m in wages and salaries along with a redundancy charge of €191,000.

The directors state that net book value of the assets at Galmoy have a net realisable value of €3.6m at the end of Dec 31, 2012.

A note attached to the accounts states that the site restoration activities commenced in 2009 with the company incurring costs of €1.37m in the year to Dec 31, 2012.

The note states: “The majority of the remaining works are expected to be completed in the next two years.”