Financial Results for the 3 months to 31 March 2015

18 May 2015
All figures in accordance with IFRS and in United States Dollars, unless otherwise stated

Consmin, a leading manganese ore producer with mining operations in Australia and Ghana, announces its quarterly results for the period ended 31 March 2015.

Key highlights

  • Total tonnes of manganese ore production for Q1 2015 decreased 17% compared to Q1 2014. Australian manganese ore production was consistent with Q1 2014 offset by a 32% decrease in Ghanaian manganese ore production compared to Q1 2014 as a result of the decision taken to reduce production following the termination of the Tianyuan Manganese Industry Co. Ltd (TMI) contract to ensure normalised stock levels by the end of 2015.
  • Manganese C1 cash costs1 for Q1 2015 were $1.97/dmtu compared to $2.29/dmtu in Q1 2014, a decrease of 14% continuing the positive trend seen over recent years.
  • Total manganese sales tonnes decreased 14% in Q1 2015 compared to Q1 2014. Australian manganese tonnes sold were 14% ahead of the same period but Ghanaian manganese tonnes sold were 40% lower as a result of the termination of the TMI contract in the second half of 2014 and allowing for the time to establish a new customer base in the EMM market in the south of China.
  • Average manganese FOB sales price achieved decreased 22% from $4.61 in Q1 2014 to $3.59 in Q1 2015.
  • The average manganese ore price for Q1 2015 (CRU, 44%Mn CIF China) was $3.83/dmtu, a decrease of 12% from $4.37/dmtu in Q4 2014. The Company’s average price for its Australian 46%Mn lump product (CIF China) was $4.32/dmtu in Q1 2015, down 7% from $4.65/dmtu in Q4 2014.
  • Adjusted EBITDA2 for Q1 2015 was $24 million, down from $48 million in Q1 2014. This decrease is principally due to lower revenues partially offset by lower mining costs. Cash EBITDA for Q1 2015 was $16 million, down from $31 million in Q1 2014.
  • The Group recorded a loss for the period of $4 million compared to a profit of $24 million in Q1 2014.
  • During the quarter the group had an operating cash inflow of $30 million compared to an inflow of $32 million from continuing operations in Q1 2014.
  • Cash and cash equivalents net of overdrafts increased in Q1 2015 by $21 million to $80 million on 31 March 2015 with net debt reducing by $22 million to $325 million over the same period.
  • Total capital expenditure for the group in Q1 2015 was only $5 million, 35% lower than in Q1 2014, as a result of the phasing of exploration activity and more specifically to maintain liquidity in light of the current difficult market conditions for manganese ore.

Key Performance Indicators

Quarter ended  
Unaudited 31 March 2015 31 March 2014 % change
Manganese ore produced (dry kt) 713.8 859.7 (17.0%)
Manganese ore sales (dry kt) 575.0 669.9 (14.2%)
Average C1 manganese unit cash cost ($/dmtu)1 1.97 2.29 (14.0%)
Average manganese FOB Sales price ($/dmtu) 3.59 4.61 (22.1%)
Revenue ($ million) 81.8 108.9 (24.9%)
Adjusted EBITDA ($ million)2 24.1 47.9 (49.7%)
‘Cash’ EBITDA ($ million)2 16.2 31.1 (47.9%)
(Loss) / profit for the period from continuing operations (3.5) 24.3 (114.4%)
  At 31 March 2015 At 31 December 2014 % change
Cash and cash equivalents ($ million) 96.6 82.1 17.7%
Gross debt ($ million) (421.3) (428.6) (1.7%)
Gross debt excluding high yield bonds ($ million) (36.0) (44.0) (18.2%)
Net debt ($ million) (324.7) (346.5) (6.3%)


1 Average C1 manganese unit cash cost represents the cash cost incurred at each processing stage from mining through to shiploading, divided by the total manganese dmtus produced.  Included within the C1 manganese cash costs are an allocation of offsite, non-corporate and support services.  Depreciation, government royalty payments, deferred stripping adjustments and stockpile movements are not included in the calculation.

2 “Adjusted EBITDA” is defined as operating profit before depreciation and amortisation, impairment write-back/expense, net foreign exchange gain/loss, non-cash inventory write-downs and exceptional items3. ‘Cash’ EBITDA is defined as Adjusted EBITDA after removing the impact of the non-cash items of deferred stripping and net movement in inventories.  Adjusted EBITDA and Cash EBITDA are the key profitability measures used across the business and reflect performance in a consistent manner and in line with how the business is managed and measured on a day to day basis.  Adjusted EBITDA and Cash EBITDA are not uniformly or legally defined measures and are not recognised under IFRS or any other generally accepted accounting principles. Other companies in the mining industry may calculate these measures differently and consequently, our presentation of Adjusted EBITDA and Cash EBITDA items may not be readily comparable to other companies’ figures.

3 Exceptional items are material or non-recurring items excluded from management’s assessment of profits because by their nature they could distort the Group’s underlying quality of earnings. These are excluded to reflect performance in a consistent manner and in line with how the business is managed and measured on a day to day basis.

Commenting on the results, David Slater (CFO of Consmin) said:

“During the quarter Consmin delivered operational performance in line with its expectations. Financial performance for the quarter was lower as a result of the combination of a difficult pricing environment and the termination of the TMI contract along with its impact on the timing of sales of Ghanaian ore whilst the development of the EMM market took place in southern China.

The Manganese C1 cash cost for quarter was $1.97/dmtu, a decrease of 14% from $2.29/dmtu for Q1 2014.  This reduction in the C1 cash cost was a positive achievement benefitting from reduced mining costs and the impact of the relative weakening of the Australian dollar. The 2015 full year estimate for the C1 cash cost is below $2.25/dmtu based on an exchange rate of 0.78 for the Australian dollar.

Consmin remains cautious in its expectations for the remainder of 2015. Manganese prices have recently come under heavy downward pressure due to the slowdown in Chinese steel production, poor liquidity, stricter environmental measures and poor margins for both ferroalloy and steel producers, which have cumulatively led to a weaker demand for Mn ore. The oversupply in the manganese ore market has prompted more aggressive offers by some suppliers driving prices down to below cost levels for some producers. Prices in May appear to have stabilised with market sentiment suggesting that prices have reached or are close to the bottom.

With regard to the TMI agreement the Company continues to contest the injunction in the Chinese courts against the drawdown demand made on the $50 million standby letter of credit with the intention of lifting it. The Company also continues to pursue the arbitration proceedings in London.”

Download the full Report for the 3 months to 31 March 2015 (PDF)

About Consolidated Minerals Limited

Consmin is a leading manganese ore producer within mining operations in Australia and Ghana.  The principal activities of the Company and its subsidiaries (the “Group”) are the exploration, mining, processing and sale of manganese products.  The Group’s operations are primarily conducted through four major operating/trading subsidiaries: Pilbara Manganese Pty Limited (Australia), Ghana Manganese Company Limited (Ghana), Manganese Trading Limited (Jersey) and Pilbara Trading Limited (Jersey).

Consolidated Minerals Limited is headquartered in Jersey and the address of its office is Commercial House, 3 Commercial Street, St Helier, Jersey, Channel Islands, JE2 3RU.

Company Information

 For further information, please visit our website or contact:

Consmin:  +44(0)1534 513 300

Mark Camaj, General Manager, Marketing
Jurgen Eijgendaal, Managing Director, Ghana
Paul Muller, Managing Director, Australia
David Slater, Executive Director and CFO

Conference Call

There will be a conference call for analysts and bondholders, the details of which will be released on the Company website

Market, Economic and Industry Data

Market, economic and industry data used throughout this report has been derived from various industry and other independent sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed and such industry forecasts may not have been updated. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward looking statements contained in this report.

Forward looking statements

This report includes “forward-looking statements” that express or imply expectations of future events or results.  Forward-looking statements are statements that are not historical facts.  These statements include, without limitation, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future production, operations, costs, products and services, and statements regarding future performance.  Forward-looking statements are generally identified by the words ‘plans,’ ‘expects,’ ‘anticipates,’ ‘believes,’ ‘intends,’ ‘estimates’ and other similar expressions.

All forward-looking statements involve a number of risks, uncertainties and other factors.  Although Consmin’s management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Consmin, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements contained in this report.  Factors that could cause or contribute to differences between the actual results, performance and achievements of Consmin include, but are not limited to, political, economic and business conditions, industry trends, competition, commodity prices, changes in regulation, currency fluctuations (including the Australian dollar and US dollar exchange rates), Consmin’s ability to recover its reserves or develop new reserves, including its ability to convert its resources into reserves and its mineral potential into resources or reserves, and to timely and successfully process its mineral reserves which may or may not occur. Consmin is also exposed to the risk of trespass, theft and vandalism, changes in its business strategy, as well as risks and hazards associated with the business of mineral exploration, development, mining and production.  Accordingly, investors should not place reliance on forward looking statements contained in this report.

The forward-looking statements in this report reflect information available at the time of preparing this report.  Subject to the requirements of the applicable law, Consmin explicitly disclaims any obligation or undertaking publicly to release the result of any revisions to any forward- looking statements in this report that may occur due to any change in Consmin’s expectations or to reflect events or circumstances after the date of this report.  No statements made in this report regarding expectations of future profits are profit forecasts or estimates, and no statements made in this report should be interpreted to mean that Consmin’s profits for any future period will necessarily match or exceed the historical published profits of Consmin or any other level.