Price slump pulls KGHM profit below expectations

Europe's No.2 copper producer KGHM posted lower-than-expected net profit in the second quarter, casting doubt over full-year guidance in the face of an ongoing slump in copper and silver prices.

The state-controlled miner's net earnings fell almost 60 percent year-on-year to 666 million zlotys ($210.1 million), versus an average forecast of 761 million.

"Because of the change in macroeconomic conditions, especially the worsening metal prices, the company is in the process of verifying its result forecast," KGHM said.

First-half net profit of 1.73 billion zlotys was a little over half its full-year guidance of 3.2 billion.

Copper prices recovered by around six percent this month, trimming the year's losses to less than 10 percent on looming uncertainty over the recovery in China.

"The fact that the forecast is not feasible was rather clear earlier on. Now, when the net result is 100 million zlotys worse below expectations, the chances are even thinner," said Societe Generale analyst, Leszek Iwaszko.

KGHM sales in the period April to June were a notch above analyst expectations at 4.4 billion zlotys. In the first six months, the miner's top line was 9.5 billion, or half of KGHM's goal for the year.

The company expects sales to hit their lowest level in the third quarter due to the closure for maintenance of its Glogow II copper smelter.

Last month, the miner stood by its full-year guidance, aiming to fight lower metal prices with cost cuts. The group's chief executive said earlier this year he could not rule out amending the targets.

Read more: GOLD: 5.10 g/t over 4.5 metres cut at Timmins Porcupine West

Explor Resources of Rouyn-Noranda, QC, has released the results of six holes from its Timmins Porcupine West project, near Timmins. The best assay was 5.1 g/t Au over 4.50 metres from hole 106.

The company is encouraged by this and other assays that indicate near surface gold mineralization extending over a strike length of 1,800 metres. The structure remains open on strike and at depth.

Explor has already determined an inferred resource at Timmins Porcupine of 6.29 million tonnes grading 4.11 g/t Au, or 831,175 oz of gold, using a cut-off grade of 2.20 g/t. The next steps will be to outline a minable resource estimate and prepare a preliminary economic assessment for the project.