MMG Limited (MMG) (Stock Code 1208.HK) is pleased to report its financial results for the year ended 31 December 2012.
- Revenue increase of 12% on solid sales volumes, despite lower commodity prices, driven by record production at Sepon and Century and additional sales from Kinsevere.
- Operational efficiencies and disciplined cost management result in underlying EBITDA of US$853.2 million, a 1% increase compared to 2011.
- Higher depreciation and amortisation from increased mining activity, drove underlying EBIT of US$405.6 million, a 25% decrease compared to 2011.
- Underlying profit of US$217.5 million was 29% lower than 2011.
- Productivity improvements drove annual production records at three of MMG’s five operating sites with operating expenses well managed amid industry-wide cost pressures, particularly in Australia.
- Successful integration and ramp-up to nameplate capacity on an annualised basis for Kinsevere following the February 2012 acquisition of Anvil Mining Limited (Anvil).
- Net cash generated from operating activities of US$655.3 million.
- Following the acquisition of Anvil, the gearing ratio was 0.46.
- Board endorsement of the A$1,488 million Dugald River project supporting MMG’s long-term zinc strategy, subject to the finalisation of financing arrangements.
- Positioned to benefit from economic growth resulting from industrialisation and modernisation of developing economies, particularly in Asia.
- MMG has not declared a dividend for the period given the focus on creating long-term shareholder value through investment in growth.
Year ended 31 December
|Underlying EBITDA (i)
|Underlying EBIT (i)
|Underlying profit (ii)
|Net cash generated from operating activities
|Underlying diluted earnings per share (iii)
|| US 3.64 cents
|| US 5.46 cents
|Underlying EBITDA margin
(i) Underlying measures of EBIT and EBITDA exclude the impact (before tax) of significant non-recurring items.
(ii) Underlying measures of profit exclude the impact (after tax) of significant non-recurring items.
(iii) Underlying diluted earnings per share represents diluted earnings per share adjusted for significant non-recurring items (after tax).
Commentary from the Chief Executive Officer
“MMG has delivered a profit to shareholders for the 2012 financial year amid volatile commodity markets and industry-wide input cost pressures.
Safety remained paramount with our total recordable injury frequency rate (TRIFR) at the end of 2012 at 3.0 per million hours worked, a 27% improvement compared to 4.1 at the end of 2011. Our lost time injury frequency rate (LTIFR) was 0.7, the same rate as 2011.
Total revenue for 2012 was US$2,499.4 million, a 12% increase from 2011 driven by record production at Sepon and Century and additional sales from Kinsevere. Increased revenue from sales was offset by the impact of lower average realised prices, with copper and zinc prices 10% and 11% lower respectively compared to 2011.
We delivered a 49% increase in total copper production to 152,336 tonnes in 2012 driven by a strong performance at Sepon and the ramp-up of Kinsevere.
Despite an annual MMG production record at Century, total annual zinc production was down 4% on 2011 to 622,536 tonnes, mainly due to lower planned zinc production at Golden Grove.
While MMG was not immune to increased cost pressures; our results demonstrate our continued disciplined approach to cost management.
The Group generated US$853.2 million in underlying EBITDA, 1% above 2011. Higher depreciation and amortisation from increased mining activity, drove underlying profit of US$217.5 million, 29% lower than 2011.
Operational efficiency, procurement and asset utilisation initiatives drove immediate benefits in 2012. Asset utilisation improved 5% on average with higher throughputs and increased production driving our performance.
We will continue the focus on asset utilisation in 2013 with particular emphasis on Kinsevere.
MMG invested in a number of one-off initiatives, aimed at improving the future reliability, performance and profitability of our assets. These included additional ground support at Rosebery, a pipeline upgrade at Century, a restructure at Golden Grove and the installation of back-up diesel generators at Kinsevere.
The US$1,068.3 million decrease in net cash flow reflects growth investment of US$2,158.1 million. This includes US$1,310.5 million to acquire Anvil and US$752.4 million toward major development and capital projects.
In February 2012, we completed the acquisition of Anvil and its Kinsevere copper cathode operation in the Democratic Republic of the Congo. The addition of Kinsevere substantially increased our copper exposure, extended average mine life and provided a sound platform for growth in the mineral-rich region of Southern Africa.
The integration of Kinsevere operation and subsequent ramp-up saw annualised nameplate production rates achieved in December 2012 with record production in the December quarter of 12,210 tonnes of copper cathode. In the first ten months of operation, Kinsevere contributed US$279.9 million in revenues and EBIT of US$60.4 million.
The MMG Board also endorsed the development and construction of the Dugald River zinc, lead and silver mine subject to final financing arrangements. Dugald River will play a significant role in MMG’s future and demonstrates our confidence in the long-term outlook for zinc. The project is expected to be commissioned in 2015.
Permitting and feasibility work continues at our Izok Corridor development project in Nunavut, Canada toward defining and optimise a single investment option.
We invested a total of US$77.3 million in exploration over 2012. The major focus continues on mine district exploration to sustain and expand reserves and increase the life of existing assets. The 2012 mine district program recorded positive results around Sepon, Rosebery, Golden Grove and Izok Corridor.
We remain confident in the medium-term outlook for sustainable levels of economic growth. The completion of political leadership changes and positive economic data from the US and China have provided greater stability to commodity markets. We expect that the industrialisation and modernisation of developing economies, particularly in Asia, will sustain the demand for commodities in the long term.
With an experienced international leadership team, a growing portfolio of base metals assets and a number of growth options, MMG is strategically well positioned to continue to generate shareholder value.
On behalf of all at MMG, I remain focused on our goal of being recognised as one of the top three global mid-tier base metals companies.”
Andrew Michelmore, Chief Executive Officer and Executive Director
|Year ended 31 December
|| Underlying EBITDA
| Kinsevere (i)
| Golden Grove
(i) MMG acquired Kinsevere following the acquisition of Anvil. The financial result of Kinsevere has been consolidated from 17 February 2012.
For further details on the 2012 financial results please refer to the full Annual Results announcement.
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A webcast of the results presentation will be held as follows:
Date: Thursday 28 March 2013
Time: 10am Hong Kong Time (UTC+08:00)
To view the live webcast, click here.
*The presentation will be conducted in English and a simultaneous Chinese interpretation will be available.