Financial Results for the three months and six months to 30 June 2014

29 Aug 2014
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 30 June 2014.

Key highlights

  • Manganese ore production for Q2 2014 was 1% higher than in Q2 2013. Australian manganese ore production was consistent with Q2 2013 production and Ghana manganese ore production increased 2% compared to Q2 2013. Overall, total manganese ore produced in the first half of 2014 was 2% higher compared to the equivalent period in 2013.
  • Manganese C1 cash costs for Q2 2014 were $2.46/dmtu consistent with Q2 2013. Manganese C1 cash costs for the first half of 2014 improved from $2.53/dmtu in H1 2013 to $2.38/dmtu in H1 2014 continuing the downward trend seen over the last three years.
  • Total manganese sales tonnes increased 4% in Q2 2014 compared to Q2 2013. Australian manganese tonnes shipped increased by 28% as the Company caught up on delayed Q1 2014 shipments, which had been affected by adverse weather. Ghana manganese tonnes shipped were 12% lower than Q2 2013 as a result of delayed shipments due to prolonged torrential rainfall at the mine site and temporary logistical constraints.
  • Average manganese FOB sales price achieved decreased 26% from $5.07 in Q2 2013 to $3.75 in Q2 2014. Overall, average manganese FOB sales price achieved decreased from $4.95 in H1 2013 to $4.12 in H1 2014, a decrease of 17%.
  • Average manganese ore price for Q2 2014 (CRU, 44%Mn CIF China) was $4.43/dmtu, down 13% from $5.08/dmtu in Q1 2014. The Company’s average CIF China price for its Australian 46%Mn lump product was $4.80/dmtu in Q2 2014, down 15% from $5.67/dmtu in Q1 2014.
  • Adjusted EBITDA for Q2 2014 was $39 million, a decrease of $33 million compared to Q2 2013.
  • The Group recorded a profit for the period of $5 million compared to a profit of $33 million in Q2 2013, a decrease of $28 million. During the quarter the Company had an operating cash outflow of $40 million of which $35 million related to cash payments to Process Minerals International Pty Limited (PMI) in settlement of the manganese tailings agreement (Super Fines Agreement) between the Company and PMI and the related legal claims and counter claims that was agreed in Q1 2014.
  • During the quarter the Company spent $235 million redeeming all of the outstanding senior secured notes due 2016.
  • On 12 May 2014, the Company issued $400 million in principal amount of 8.0% senior secured notes due 2020. Of the net proceeds of the issue $118 million were used in part to repurchase the remaining senior secured notes due 2016. A further $250 million of the proceeds were used to partially repay the shareholder loans treated as equity in the accounts.
  • Cash and cash equivalents net of overdraft decreased by $161 million to $68 million in Q2 2014 with net debt increasing from $3 million to $341 million over the same period.
  • In July 2013 the Company ceased mining at its Coobina chromite mine and final sales of chromite ore concluded in Q1 2014. On the 2 April 2014 the Company transferred the Coobina tenement assets to PMI in part settlement of the liability arising from the termination of the Super Fines Agreement generating a non cash gain on disposal of $10 million. Coobina has been reclassified as a discontinued operation in the statement of comprehensive income for Q2 2014 and Q2 2013.
  • The Company has recently received notification from TMI that as a result of fundamental operational issues they will be unable to continue to perform on the long-term off-take agreement. This has resulted in a termination event and a termination letter has been issued to TMI to protect the Company’s position. The Company has also issued instruction to its bank to draw on the $50 million standby letter of credit to offset the damages that the Company will suffer as a result of the early termination of the off-take agreement.

Key Performance Indicators

Quarter ended Six months ended
Unaudited 30 June
30 June
% change 30 June
30 June
% change
Manganese ore produced (dry kt) 870.8 862.9 0.9% 1,730.5 1,693.2 2.2%
Manganese ore sales (dry kt) 867.5 836.2 3.7% 1,537.4 1,636.7 (6.1%)
Average C1 manganese unit cash cost ($/dmtu)1 2.46 2.46 0.0% 2.38 2.53 (5.9%)
Average manganese FOB Sales price ($/dmtu) 3.75 5.07 (26.0%) 4.12 4.95 (16.8%)
Revenue ($ million)2 116.4 149.6 (22.2%) 225.3 290.3 (22.4%)
Adjusted EBITDA ($ million)2,5 39.1 72.1 (45.8%) 87.0 124.5 (30.1%)
‘Cash’ EBITDA ($ million)4,5 28.5 60.8 (53.1%) 59.6 111.1 (46.4%)
Profit for the period from continuing operations5 (5.0) 33.1 (115.1%) 19.3 57.5 (66.4%)


Unaudited At 30 June 2014 At 31 December 2013 % change
Cash and cash equivalents ($ million) 74.4 219.9 (66.2%)
Gross debt ($ million) (415.0) (242.5) 71.1%
Gross debt excluding high yield bonds ($ million) (31.5) (14.3) 120.3%
Net debt/(cash) ($ million) (340.6) (22.6) 1,407.1%
  1. 1Average C1 manganese represents the cash cost incurred at each processing stage from mining through to shiploading, over the total manganese dmtus produced. Included within the C1 manganese unit 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. 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. This is the key profitability measure used across the business and reflects performance in a consistent manner and in line with how the business is managed and measured on a day to day basis. Adjusted EBITDA is not a uniformly or legally defined measure and is not recognised under IFRS or any other generally accepted accounting principles. Other companies in the mining industry may calculate this measure differently and consequently, our presentation of Adjusted EBITDA items may not be readily comparable to other companies’ figures.
  3. 3Exceptional 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.
  4. 4‘Cash’ EBITDA is defined as Adjusted EBITDA after removing the impact of the non-cash items of deferred stripping and net movement in inventories.
  5. 5Balances related to 2013 have been restated to exclude discontinued operations.

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

“During the second quarter, Consmin delivered a steady operational and financial performance despite a difficult pricing environment.

Manganese sales tonnes increased by 4% in Q2 2014, when the Company caught up on the delayed sales in Australia in Q1 2014 due to adverse weather conditions. Volumes of manganese ore produced were 1% higher, with manganese C1 cash costs being $2.46 for the quarter and $2.38 in year-to-date further improving on the 2013 C1 cash costs.

I am disappointed to report that TMI have recently notified the Company that they are unable to continue to perform on the long-term off-take agreement due to operational issues with their newly constructed EMM production lines. The Company has as a consequence issued a termination letter to TMI and issued instructions to its bank to draw on the $50 million standby letter of credit to offset the damages that the Company will suffer as a result of the early termination of the off-take agreement. On-going conciliatory discussions are being held between the parties in order to resolve this matter.”

Download the full Report for the Second Quarter ending 30 June 2014 (PDF – 964KB)

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: Consolidated Minerals 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:


+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 on 29 August 2014 at 1pm BST (British Summer Time).

To access the results conference call, you must first register in advance on:

Market, Economic and Industry

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.