Southern Alliance Mining sinks into the red with H1 loss of RM7 million

MALAYSIAN iron-ore producer Southern Alliance Mining has sunk into the red with a net loss of RM7 million (S$2.1 million) for its financial first half ended Jan 31.

The Catalist-listed company’s net profit in the year-ago period was RM19.6 million.

Revenue fell to RM52.2 million for the same period, down 47 per cent from RM98.5 million last year. 

Loss per share stood at 1.43 Malaysian sen, down from earnings per share of 3.96 sen in the year ago period.

The drop in revenue was mainly due to intense overburden removal activities that its Chaah Mine underwent during the period, which was required in accordance with the mining schedule, Southern Alliance Mining said in a regulatory filing on Thursday (Mar 16).

This had resulted in lower volumes of ore produced in the first half, it pointed out. 

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The sales volumes of iron ore concentrate and tailings correspondingly fell. Compared to the year-ago period, the sales volume of iron ore concentrate fell 37.5 per cent, while that of iron ore tailings fell 83.7 per cent.

No dividend has been declared or recommended for the first half, as the dividend shall be guided by the results of the full financial year, the company stated.

While it made losses in the first half, the company stated optimism, noting that its investments in intense overburden removal activities are expected to reap benefits in the future.

Not only will these activities eventually increase the group’s iron-ore production, it will allow the company to capitalise on an improving demand outlook for the commodity moving forward, the iron-ore producer said.

China’s reopening is likely to drive the recovery of iron ore prices this year as well, it added.

Meanwhile, the group said it has been proactive in seeking avenues to diversify into other base metals and gold – its exploration programme at the Tenggaroh Prospect is underway, and its associated drilling process is expected to start in April.

“We are confident that our current expansion and diversification strategy will position us for multi-year growth as global economic distress reduces in the medium-term and iron ore prices rebound,” said the group’s managing director Pek Kok Sam.

Shares of Southern Alliance Mining closed down 1.6 per cent at S$0.61 on Thursday.