MMG Limited (MMG) today reported its full year financial results for the period ended 31 December 2018.
Full year 2018 highlights:
- Net profit after tax from continuing operations of US$136.6 million, including US$64.8 million attributable to equity holders of the Company, 55% lower than 2017.
- Net Cash Flow from Operating Activities of more than US$1.7 billion reduced net debt1 by US$733.4 million. Gearing2 has reduced from 74% at 31 December 2017 to 72% at 31 December 2018.
- Underlying EBITDA from continuing operations of US$1,751.2 million was 8% below the prior year, due to lower copper production at Las Bambas in 2018.
- Total copper and zinc production from continuing operations of 466,475 and 223,041 tonnes respectively.
- Dugald River and Las Bambas are now established as top 10 producing mines internationally in zinc and copper respectively.
- MMG finalised the sale of its 90% interest in Sepon for US$275 million.
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Commentary from Geoffrey Gao, Chief Executive Officer
“In 2018, MMG delivered a significant milestone with the commissioning of its second greenfield development project in two years with the start of commercial production at Dugald River.
“Throughout the year, we maintained our focus on making our business leaner, more efficient and positioned for growth.
“We are committed to securing a strong future for our assets through development and near mine exploration to extend mine life and to looking for our next value accretive external growth opportunity.
“We reduced net debt by US$733.4 million in 2018 and US$2.7 billion since the start of commercial production at Las Bambas on 1 July 2016 on the back of the Company’s strong cash generation.
“We are driven to deliver greater value for our shareholders by reducing debt, driving operational performance and asset development and careful cost management.
“Our operations produced 466,475 tonnes of copper and 223,041 tonnes of zinc for the full year 2018.
“Our 2019 production guidance is 462,500-485,000 tonnes of copper and 250,000-270,000 tonnes of zinc.
Safety
“At MMG, safety is our first value. In 2018 we continued to place significant focus on reducing injuries across our operations.
“Our total recordable injury frequency (TRIF) for 2018 was 1.00 which represents a 14.5% reduction on 2017.
“While this represents progress in the right direction, tragically we lost one of our colleagues at the Sepon Mine. Mr Kham Phathithak died following an incident in which his vehicle was struck by a tree during tree felling activities. We extend our heartfelt condolences to his family and friends.”
Concentrate Logistics update
Las Bambas
“Outbound concentrate transport from Las Bambas continues to be disrupted by a community blockade approximately 136km from Las Bambas, in the Cusco region. The illegal blockade is on a stretch of public national road and relates to a claim for compensation for a pre-existing easement on the Yavi Yavi farmland transferred to the Fuerabamba community as part of the 2011 resettlement agreement.
“Production continues at site, however, failure to resolve the situation, or any escalation, could impact on production in the near term. Stocks at the Matarani Port are exhausted and customers have been advised of delays to future shipments.
“A government-sponsored dialogue process involving the community, external representatives and Las Bambas, seeks to remove the block as a precursor to further discussion. To date this request has not been respected.
“We remain focused on ensuring the health, safety and security of the community, our employees, contractors and public road users.
Dugald River
“At Dugald River, we have implemented alternative arrangements to truck concentrate to the Port of Townsville following the recent extreme weather events in the region and the subsequent significant impact to the rail line.
“Production continues at site and we have now secured a fleet of trucks enabling us to continue to transport concentrate in sealed containers until rail access is expected to be re-established between late April and mid-May.
Strategy and growth
“We ended 2018 with a focused portfolio of high quality assets in the right commodities.
“In 2019 we expect to deliver increased metal production and will maintain our focus on achieving further efficiencies and cost reductions across the business.
“MMG’s core commodities of copper and zinc are well positioned to both contribute to – and benefit from – the de-carbonisation of future energy needs, an accelerating market for electric vehicles and developments in battery storage technology.
“We are now an established player in the Democratic Republic of the Congo, Peru and Australia with the strong support from our major shareholder and China’s largest resources group, China Minmetals Corporation.
“We remain very confident in the near term macro-economic outlook and the robust supply-demand fundamentals of our core commodities.
“MMG completed the sale of its 90% interest in Sepon mine in November 2018 for US$275 million which follows successful divestments of the Century, Golden Grove and Avebury assets and forms part of our strategy to focus our portfolio on long life, quality, base metal mining assets.”
1 Net debt: total borrowings excluding finance charge prepayments, less cash and bank deposits.
2 Gearing: net debt divided by the aggregate of net debt plus total equity.
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