MMG Limited today reported a record interim result, recording net profit after tax of US$584.0 million, with a profit of US$400.1 million attributable to equity holders for the first six months of 2021. This compared with a net loss after tax of US182.7 million in the first half of 2020, including a loss attributable to equity holders of US$158.0 million. EBITDA of US$1,498.7 million was 291 per cent higher than the prior period.
“The strong profit was driven by higher commodity prices, increased production and the sale of Las Bambas stockpiles,” said MMG Chief Executive Officer, Geoffrey Gao.
Total payable copper and zinc sold, 191,669 and 108,927 tonnes respectively, was 11 per cent and three per cent higher than the first half of 2020.
“Safety is MMG’s number one priority. While our target is zero incidents, MMG recorded a Total Recordable Injury Frequency (TRIF) of 1.17 per million hours worked for the six months to 30 June 2021, an improvement on the 1.82 recorded in the prior corresponding period,” said Geoffrey Gao.
Las Bambas produced 144,642 tonnes of copper concentrate in the first half of 2021. EBITDA of US$1,182.4 million was 260 per cent higher than the first half of 2020, largely attributable to higher copper prices, production rates and increased sales volumes flowing from higher road transport availability and a corresponding reduction in stockpiled concentrate inventory.
Kinsevere’s output of 25,123 tonnes of copper cathode in the first half of 2021 was 31 per cent lower compared to the prior 2020 period, with temporary processing of lower grade stockpiles and third-party ores. EBITDA of US$94.7 million was 1,055 per cent up on the prior period, however, due to a higher copper price and lower operating costs with no mining activity in the first half of 2021.
Dugald River produced 89,076 tonnes of zinc concentrate with an EBITDA of US$101.7 million during the first half of 2021, significantly higher than the US$9.1 million result for the first half of 2020. Higher prices and zinc sales volumes were the primary drivers behind the stronger performance.
Rosebery generated 37,460 tonnes of zinc in zinc concentrate during the first half of 2021 and 84,911 tonnes in zinc equivalent terms (including lead, copper, gold and silver). On a zinc equivalent basis this was 23 per cent higher than the first half of 2020. EBITDA of US$106.2 million represented a 119 per cent increase on the first half of 2020 on the back of higher metal prices and production.
Geoffrey Gao said: ”While the coronavirus pandemic remains a global challenge, MMG maintained continuous production and supported its employees and mine site host communities.
“MMG is committed to work in support of government vaccine roll-out plans while protecting the safety of its people and host communities. Extensive pre-screening and health controls remain in place at all sites.”
Net debt reduced by US$1,207.8 million over the first half of 2021 due to strong operational cash flow and the issue of US$299.0 million of additional equity in June. Gearing reduced from 73 per cent to 62 per cent over the first half of 2021, significantly strengthening the balance sheet as MMG looks to move into its next phase of disciplined growth.
Anticipated regulatory approval to develop the Las Bambas Chalcobamba pit was held back due to administrative and community consultation delays and the 2021 national election outcomes. As a result, timing has been pushed out to the second half of 2021, subject to approvals.
“MMG remains focused on the delivery of near and mid-term growth opportunities including development and expansion plans for Las Bambas and Kinsevere,” said Geoffrey Gao.
Looking ahead to the rest of the year, MMG will closely monitor market conditions, implement its longer-term strategy, business transformation and cost saving goals, while managing COVID-19 risks.
Full year copper production of between 360,000 and 370,000 tonnes is now expected at Las Bambas and Kinsevere, and zinc production of between 240,000 and 260,000 tonnes at Dugald River and Rosebery. C1 cost guidance is reduced at Kinsevere, Rosebery and Dugald River, with an ongoing focus on cost control measures.
Please download a full copy of the MMG 2021 Interim Results Announcement here.