The Nickel Mines Ltd (ASX: NIC) share price has started the week very strongly.
In afternoon trade the nickel producer's shares are up a sizeable 8% to a new record high of $1.39.
When the Nickel Mines share price reached that level, it meant it was up a massive 135% since this time last year.
Why is the Nickel Mines share price surging higher today?
Investors have been buying Nickel Mines shares following the release of its final quarter update for FY 2020.
According to the release, Nickel Mines had a record-breaking quarter in respect to production, sales, and earnings.
During the quarter, the combined production from its Hengjaya Nickel and Ranger Nickel projects (on a 100% basis) came to a record 11,527 tonnes of nickel. Management advised that production levels were consistently around 1,900 tonnes per month of nickel from each project.
Pleasingly, a strong rise in the nickel pig iron (NPI) price across the quarter led to the weighted average contract price received being 23.4% higher than in the September 2020 quarter. This underpinned record sales of US$158.8 million across the Hengjaya Nickel and Ranger Nickel projects.
It was the same story for its earnings, with the company delivering record underlying earnings before interest, depreciation and amortisation (EBITDA) of US$71.6 million and a record underlying net profit of US$67.8 million for the three months.
At the end of December, the company held cash and cash equivalents of US$351.4 million. This is up from US$93.8 million at the end of September.
"Delighted"
Nickel Mines' Managing Director, Justin Werner, was delighted with the company's performance during the quarter.
He said: "We are delighted to report to our shareholders on what was a record-breaking quarter for both our RKEF and mine operations. The December quarter marked another period of very strong and consistent production from both Hengjaya Nickel and Ranger Nickel, which combined with a much stronger NPI price, translated into a record financial performance for our RKEF operations."
"Production from the Hengjaya mine of almost 500,000wmt for the quarter means the mine should meet targeted ramp up from 600,000wmt pa to 1.5 mtpa with further ramp up targets to be implemented. Encouragingly, costs at the Hengjaya mine continue to decline significantly," he added.
Outlook
Mr Werner appears confident on the company's prospects in FY 2021.
He said: "With the Company's RKEF assets now well established, a development project underway and a broadly positive outlook across the global nickel market we look forward to 2021 with great optimism."
