The New Century Resources Ltd (ASX: NCZ) share price is up by 8.57% today, thanks to a market announcement that revealed significant increases in the miner’s quarterly production, alongside cost reduction measures.
The news will be well received by shareholders, after the New Century share price has tumbled from its $0.45 high in the past year.
What happened?
In its announcement, New Century Resources declared commercial production at its Century Zinc Mine operation in Queensland, meaning that production from the mine begins to make operations economically feasible. This follows the mine recording a 22% increase in zinc metal production during the quarter ended June 2020, hitting 34,500 tonnes. The mine also saw a large decrease in direct costs, which were down to about US$0.79/lb on payable metal.
This increase is the 7th consecutive quarter in which the mine has seen not only increased zinc production but also the reduction in costs.
New Century managing director Patrick Walta confirmed that the company remains focused on continuing this trend, and commented that the mine is “now re-established as a top 10 zinc producer just 3 years since being shutdown for closure.”
Goro nickel and cobalt mine acquisition
Towards the end of May, New Century made an announcement that it had entered a 60-day exclusivity period with Vale in relation to the potential acquisition of the Goro nickel and cobalt mine in New Caledonia. The company is continuing to move forward with negotiations for the provision of suitable funding and long-term working capital for the operation.
If the acquisition of the Goro operation is successful, it would result in New Century Resources becoming a major supplier of nickel and cobalt for the growing electric vehicle industry.
About the New Century share price
Despite the zinc price remaining near 4-year lows, Walta stated that the company sees “potential for a price rebound due to additional metal demand from increased global infrastructure development linked to Covid-19 government stimulus.” Any price rebound in the zinc price will have a corresponding impact on the New Century share price.
The New Century share price has been wildly volatile since it listed in mid 2017, going from $1.50 to lows of $0.05 in March, before rebounding to $0.19 a share, or an increase of 280% since March.
However, New Century does remain one of the most shorted shares on the ASX.
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Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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