Highlands Pacific benefits from nickel, cobalt

Higher nickel and cobalt production and firmer prices enabled Papua New Guinea-focused Highlands Pacific to boost profitability in this year's first half.

The Australia-based company is a 8.56pc shareholder in the Ramu mine, which increased its first-half nickel output to 17,370t from 16,956t a year earlier and cobalt output to 1,644t from 1,624t. The biggest shareholder is Metallurgic Corporation of China.

Ramu's profitability rose on its plant operating above its design capacity and the average nickel price increasing by 35pc to $13,548/t and the average cobalt price rising by 85pc to $88,461/t.

Highlands Pacific earlier this year entered into a $113mn streaming deal with Canada's Cobalt27 for 55pc of its attributable cobalt output and 27.5pc of its attributable nickel output for the life of the Ramu project. On completion, this deal will lift Highlands Pacific's stake in Ramu to 11.3pc after repayment of project debt. Cobalt27 will also pay the company $1/lb of nickel and $4/lb of cobalt from the streaming agreement.

"Longer term, the outlook for battery metals, including cobalt, nickel and copper, remains very favourable and Highlands is well positioned to benefit from growth in demand for electric vehicles which will continue to underpin commodity prices," said managing director Craig Lennon.

The company is also developing the Star Mountains copper-gold project that has a mineral resource of 210mn t estimated to contain 810,000t of copper and 2.9mn oz of gold. It is a 20pc shareholder in the Frieda River copper-gold project, where a feasibility study is due for completion by key shareholder Pan Aust by the end of the year.

Highlands Pacific reported a profit of $36.1mn for the first half of 2018 compared with $1.5mn a year earlier.