MMG Limited (MMG) today reported its full year financial results for the period ended 31 December 2019.
Full year 2019 highlights:
- Net Cash Flow from Operating Activities of US$1,145.1 million and reduction in borrowings of US$511.4 million.
- Underlying net loss after tax attributable to equity holders of US$125.4 million for the year.
- Non-cash impairment net of tax of US$105.0 million to the carrying value of Kinsevere’s oxide related assets.
- Total copper and zinc production from continuing operations of 451,963 and 253,520 tonnes respectively.
- Las Bambas produced 382,518 tonnes of copper in concentrate in 2019, the result slightly below prior year due to community road blocks.
- Dugald River, now in its first full year of commercial production, delivered another year of strong performance along with Rosebery which achieved mining and milling volumes in excess of one million tonnes for the second consecutive year.
Commentary from Geoffrey Gao, Chief Executive Officer
“In 2019 MMG celebrated its 10 year anniversary. Over the past decade we have commissioned two greenfield development projects and achieved world-class ramp ups at Las Bambas and Dugald River.
Dugald River, now in its first full year of commercial production, performed very strongly in 2019 with the mill having operated above design capacity for seven consecutive quarters.
Our financial performance was impacted by lower commodity prices and lower copper sales following the logistics disruptions in Peru.
Notwithstanding these challenges, we have continued to focus our efforts on the levers within our control, cost and productivity. Throughout the year we have pursued transformation throughout our business with cost and efficiency improvements across all sites as well as transitioning to a fit-for-purpose and leaner overhead structure.
Our operations produced 451,963 tonnes of copper and 253,520 tonnes of zinc for the full year 2019.
Our production guidance for 2020 is 418,000-445,000 tonnes of copper and 225,000-245,000 tonnes of zinc.”
Safety
“Safety is one of our guiding values and in 2019 our total recordable injury frequency (TRIF) was 1.58 per million hours worked, an increase from 1.00 recorded in 2018.
This result still places us within the best performing companies among our peers in the International Council on Mining and Metals (ICMM), however, it is disappointing to see an increase in injuries.
We will continue to drive improvement in making our workplaces safer by continuing to embed a safety-first mindset among our people.”
Financial performance
“MMG recorded total revenue of US$3,032.3 million and Earnings Before Interest, Tax, Depreciation, Amortisation and Impairments (EBITDA) of US$1,461.5 million.
While this result is below the 2018 result due to lower sales revenue at Las Bambas and Rosebery and operational challenges at Kinsevere, tight cost management and careful planning enabled us to achieve a reduction in borrowings of US$511.4 million.
Commodity prices and lower copper sales from Las Bambas impacted profit, and this, along with non-cash impairment of US$105.0 million to the carrying value of Kinsevere’s oxide related assets, resulted in a after tax loss attributable to equity holders of US$230.4 million.”
Strategy and outlook
“Across our portfolio we are committed to extracting the maximum value from our operations and on extending life of assets. This includes a significant focus on drilling programs around existing operating hubs.
Our Las Bambas asset in particular, has tremendous upside potential and in the second half of 2020 we expect to start mining in the Chalcobamba pit.
The site is now expected to produce around two million tonnes of copper in the five-year period from 2021 to 2025, extending previous guidance of two million tonnes in the first five years and significantly above the pre-production mine plan.
At Las Bambas we continue to engage in dialogue with communities along the transport corridor with the objective of finding enduring solutions to logistics challenges.
Finally, while we anticipate some short term market weakness due to the COVID-19 outbreak, we are encouraged by the tight supply and demand fundamentals for copper and zinc.
Our core commodities are well positioned to benefit from the growth in electric vehicle and renewable energy demand, as well as urbanisation and China’s Belt and Road initiative.”
Please download a full copy of the MMG 2019 Annual Results announcement here.
ENDS