Financial Results for the three months & six months to 30 June 2015

17 Aug 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 30 June 2015.

Key Highlights

  •  Total tonnes of manganese ore production for Q2 2015 decreased 12% compared to Q2 2014. Australian manganese ore production decreased by 11% and Ghanaian manganese ore production decreased by 13% compared to Q2 2014. Overall, total manganese ore production in the first half of 2015 was 14% lower compared to the equivalent period in 2014.
  • Continuing the positive trend seen over recent years, manganese C1 cash cost1 for Q2 2015 improved to $1.99/dmtu compared to $2.46/dmtu in Q2 2014, a decrease of 19%. The manganese C1 cash cost for the first half of 2015 was $1.98/dmtu compared to $2.38/dmtu in H1 2014.
  • Total manganese sales tonnes decreased 19% in Q2 2015 compared to Q2 2014. Australian sales decreased 33% due to weak Chinese demand in April and a delayed June shipment. Ghanaian sales decreased 6% as a result of another delayed shipment due to adverse weather conditions.  Overall, total manganese sales tonnes in the first half of 2015 were 17% lower compared to H1 2014.
  • Average manganese FOB sales price decreased 34% from $3.75 in Q2 2014 to $2.47 in Q2 2015. Overall, average manganese FOB sales price decreased 27% from $4.12 in H1 2014 to $3.01 in H1 2015.
  • The average manganese ore price for Q2 2015 (CRU, 44%Mn CIF China) was $3.10/dmtu, a decrease of 19% from $3.83/dmtu in Q1 2015. The Company’s average price for its Australian 46%Mn lump product (CIF China) was $3.33/dmtu in Q2 2015, having started the year at $4.65/dmtu and ended the second quarter at $3.30/dmtu.
  • Adjusted EBITDA2 for Q2 2015 was $15 million, down from $39 million in Q2 2014, principally due to lower revenues partially offset by reduced mining costs. Cash EBITDA for Q2 2015 was $1 million, down from $29 million in Q2 2014.
  • During the quarter the Group recorded two significant items comprising of a $50 million other operating income relating to funds received from Tianyuan Manganese Industry Co. Ltd (TMI) for access to future purchases of Ghanaian manganese ore and a $9 million write-down of capitalised exploration costs associated with the relinquishment of tenements held by our Australia operations to the Department of Mines and Petroleum.
  • The Group recorded a profit for the period of $22 million compared to a loss of $5 million in Q2 2014, an increase of $27 million.
  • During the quarter the Group had an operating cash inflow of $55 million compared to an outflow from continuing operations of $41 million in Q2 2014.
  • Cash and cash equivalents net of overdrafts increased in Q2 2015 by $34 million to $114 million on 30 June 2015 with net debt reducing by $35 million to $290 million over the same period.
  • Total capital expenditure for the Group in Q2 2015 was only $3 million, 73% lower than in Q2 2014, as a result of reduced exploration activity in order to maintain liquidity in light of the current difficult market conditions for manganese ore.

Key Performance Indicators

Quarter ended Six months ended
Unaudited 30 June
30 June 2014 % change 30 June
30 June
% 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.

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

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.