Consmin, a leading manganese ore producer with mining operations in Australia and Ghana, announces its quarterly results for the period ended 30 June 2015.
Key Highlights
| Quarter ended | Six months ended | |||||
|---|---|---|---|---|---|---|
| Unaudited | 30 June 2015 |
30 June 2014 | % change | 30 June 2015 |
30 June 2014 |
% change |
| Manganese ore produced (dry kt) | 767.2 | 870.8 | (11.9%) | 1,481.0 | 1,730.5 | (14.4%) |
| Manganese ore sales (dry kt) | 700.1 | 867.5 | (19.3%) | 1,275.1 | 1,537.4 | (17.1%) |
| Average C1 manganese unit cash cost ($/dmtu)1 | 1.99 | 2.46 | (19.1%) | 1.98 | 2.38 | (16.8%) |
| Average manganese FOB Sales price ($/dmtu) | 2.47 | 3.75 | (34.1%) | 3.01 | 4.12 | (26.9%) |
| Revenue ($ million) | 61.0 | 116.4 | (47.6%) | 142.8 | 225.3 | (36.6%) |
| Adjusted EBITDA ($ million)2 | 14.9 | 39.1 | (61.9%) | 39.0 | 87.0 | (55.2%) |
| ‘Cash’ EBITDA ($ million)3 | 0.8 | 28.5 | (97.2%) | 16.9 | 59.6 | (71.6%) |
| Profit for the period from continuing operations | 22.0 | (5.0) | 540.0% | 18.5 | 19.3 | (4.1%) |
| Unaudited | At 30 June 2015 | At 31 December 2014 | % change |
|---|---|---|---|
| Cash and cash equivalents ($ million) | 117.6 | 82.1 | 43.2% |
| Gross debt ($ million) | (407.5) | (428.6) | (4.9%) |
| Gross debt excluding high yield bonds ($ million) | (21.6) | (44.0) | (50.9%) |
| Net debt ($ million) | (289.9) | (346.5) | (16.3%) |
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 second quarter Consmin delivered operational performance in line with its expectations. Financial performance for the quarter, however, was lower as a result of the continuing difficult pricing environment, offset by continuing improvement in C1 costs. Liquidity in the quarter improved from $80 million to $114 million.
The manganese C1 cash cost for quarter was $1.99/dmtu, a decrease of 19% from $2.46/dmtu for Q2 2014. This reduction in the C1 cash cost was another 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 expected to be below $2.25/dmtu based on an exchange rate for the Australian dollar of 0.75 for the remainder of the year.
In the first four months of 2015 manganese prices came 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 weaker demand for manganese ore. The oversupply in the manganese ore market has prompted more aggressive offers by some suppliers driving prices down to close to or below cost levels. Consmin continues to remain cautious in its expectations for the remainder of 2015, with prices for the three-month period from May to July having stabilised and looking likely to remain flat for August, suggesting that prices may have reached or are close to the bottom.
On 27 May 2015, Consmin and TMI entered into an agreement concluding the differences that had arisen in their relationship, including the termination of all existing legal proceedings, and the re-establishment of their mutual trading relationship. As part of that negotiated conclusion, Consmin received $51 million from TMI, which comprises in part a payment to access manganese ore from Ghana in the future and in part an advance payment in respect of future shipments.
During the second quarter Consmin shipped 105k dry tonnes to TMI with an additional shipment of 104k dry tonnes sailing in early July. In July 2015, Consmin and TMI signed a three year Memorandum of Understanding (MoU) to supply 1 million tonnes per annum of Ghanaian ore, commencing in September 2015. Sales to TMI will complement on-going sales to EMM producers in South China, along with sales to our long-term customers in Ukraine, Norway and Slovakia.”
Consmin Quarterly Report – Q2 2015
About Consolidated Minerals Limited
Consmin is a leading manganese ore producer with 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.
For further information, please visit our website www.consmin.com or contact:
Mark Camaj, General Manager, Marketing
Jurgen Eijgendaal, Managing Director, Ghana
Paul Muller, Managing Director, Australia
David Slater, Executive Director and CFO
There will be a conference call for analysts and bondholders, the details of which will be released on the Company website www.consmin.com.
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.
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.
