The company's re-set plan for Nifty provides a path to profitability and is split into two phases over three years. Production and costs are below Macquarie's forecasts, which drives a weaker earnings outlook.
Production at both Nifty and Rennison was slightly below Macquarie's estimates. Nevertheless, the broker is encouraged by the fact the company has opened up mining stopes outside the central zone at Nifty, which has resulted in an improvement in the grade.
FY17 profit was weaker than Macquarie expected. The pending upgrade to reserves at Nifty is expected to underpin a 7-8 year mine life, while near-mine and extension drilling may materially upgrade assumptions for the project.