Millennium Minerals (ASX:MOY) shares were trading 17% higher today after the company formally consolidated control over its recently optimised Nullagine gold operations in Western Australia.
Stock in Millennium was last trading at A$0.075 after improvements at Nullagine spurred a mid-year surge from pricing of around $0.02 per share to a range consistently above $0.06 in recent weeks.
Today’s spike follows completion of a move flagged by Millennium earlier in the month to acquire its joint venture partner’s interest in Nullagine.
The acquisition is expected to be earnings accretive to Millennium and will remove the administrative overhead associated with managing a JV. It also simplifies the ownership structure of the project, bringing it into line with Millennium’s 100% ownership of other tenements at the 640-square-kilometre Nullagine site.
The transaction reflects another sign of Millennium’s improved confidence at Nullagine following a revised guidance statement last month that called for an 11% increase in annual gold production of 80,000-83,000 ounces.
The August guidance change also included a 6% reduction in all-in sustaining costs to $1,200-$1,250 per ounce and sparked a dramatic upswing in the company’s share value.
The cost reductions were a result of both improved mill throughput and a number of cost saving measures implemented since the start of the yea. These optimisations have so far delivered more than $12 million in annualised savings.
The improved financial metrics underpinned the more robust production forecasts, enabling Millennium to maximise cash flow and hence reduce its senior debt rapidly.
At the end of the half-year period to June, the company reported an after-tax profit of $2 million, inclusive of unrealised loss on gold forward contracts of $2.6 million and depreciation and amortisation charges of $6.2 million.
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