(Updates with share price in fourth paragraph.)
Feb. 22 (Bloomberg) -- IRC Ltd., the company mining iron ore in Far East Russia, posted its first annual profit since listing in Hong Kong in 2010 after ramping up production at its Kuranakh mine to full capacity.
Net income was $1 million in 2011 compared with a loss of $82 million a year earlier, IRC said today in a statement. Sales increased fourfold to $122.2 million.
The unit of gold miner Petropavlovsk Plc said production of iron ore concentrate and ilmenite exceeded targets. IRC plans to increase iron ore output to 4.5 million metric tons by 2014 after starting its flagship K&S mine. The project is located 60 kilometers (37 miles) from the Chinese border, according to its website.
IRC fell 6.5 percent to HK$1.45 at the close in Hong Kong, the biggest decline since Nov. 10, after the earnings announcement. The benchmark Hang Seng index gained 0.3 percent.
The market reacted negatively because the company reported a net operating loss, Robin Tsui, a Hong Kong-based analyst at BOC International Holdings Ltd., said by telephone. IRC’s net operating loss narrowed to $9.6 million in 2011 from $71.9 million a year earlier, according to the statement.
IRC, which is the second company from Russia to list in Hong Kong, after aluminum producer United Co. Rusal, produced 63,490 tons of ilmenite last year, 22 percent more than targeted, the company said Jan. 12. Output of the material used to make paint pigment may almost double to 125,000 tons this year, IRC said today.
Production of iron ore concentrate reached 800,291 tons, compared with an estimated 750,000 tons.
“We are achieving good prices,” Executive Chairman Jay Hambro said by telephone. “The more we produce, the more power we have. That means we start making savings with transport and our unit costs go down.”
The average realized iron-ore concentrate price fell to $131 a ton in the last three months of 2011, the lowest that year and less than the $150 in the third quarter, the company said Jan 12. Iron ore may average $150 a ton in 2012, Goldman Sachs Australia Pty said this month.
“We haven’t seen any slowdown in our demand,” Hambro said. “India remains a small exporter, but over the next 18 to 36 months, it will become a net importer. There would be quite an influence on the price.”
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