MMG Limited (MMG) today reported its full year financial results for the period ended 31 December 2020.
Highlights
- Total recordable injury frequency (TRIF) improved 13% on prior period.
- Total copper and zinc production of 384,564 and 245,097 tonnes respectively.
- Net Cash Flow from Operating Activities increased by 19% to US$1,358.2 million, supporting a reduction in borrowings of US$453.3 million.
- Net loss after tax attributable to equity holders of US$64.7 million – a 72% improvement on 2019.
- Full year financial performance was impacted by lower zinc prices and the effects of COVID-19 and community disruptions on Las Bambas’ sales volumes. This was offset by improved Kinsevere output, record setting operational performance at Dugald River, higher copper and precious metal prices and lower financing costs.
- Las Bambas produced 311,020 tonnes of copper in concentrate in 2020, an estimated 70,000 tonne shortfall due to COVID-19 workforce challenges and unplanned site maintenance. Las Bambas’ annual copper production is anticipated to increase to an average of 400,000 tonnes over the period 2022 to 2025.
- A positive mid-term outlook with anticipated approval of the next phase of development at Kinsevere, the potential for mine life extension at Rosebery, expected strong medium-term performance for Las Bambas and Dugald River together with favourable commodity prices.
Commentary from Geoffrey Gao, Chief Executive Officer
“Despite unprecedented challenges, MMG ended 2020 in a strong position with improving commodity prices and recovering production levels. This includes at Las Bambas, where MMG’s workforce levels have returned to near full capacity following significant COVID-19 related disruptions. MMG maintained continuous production at all sites throughout the year, with effective management of COVID-19 risks to employees and communities and mitigation of impacts on operations,” said Mr Gao.
MMG’s operations produced 384,564 tonnes of copper and 245,097 tonnes of zinc for the full year 2020.
MMG expects to produce between 360,000 and 390,000 tonnes of copper and 240,000 and 260,00 tonnes of zinc in 2021, with Las Bambas’ annual copper production anticipated to increase to an average of 400,000 tonnes over the period 2022 to 2025.
Safety
Safety is our first value. In 2020, our total recordable injury frequency (TRIF) was 1.38 per million hours worked, a 13% decrease on the 2019 TRIF of 1.58. While TRIF is an important lagging indicator, we are consistently pushing to improve our leading indicators, with particular focus on the analysis – and learnings from – significant incidents.
Importantly, MMG has effectively managed the risks presented by the COVID-19 pandemic, adjusting procedures at our sites. We are encouraged by global vaccine programs that are being developed and rolled out, but remain acutely aware of the ongoing challenges that will remain for us all in the near term. MMG directs significant efforts to manage risks posed to our people and communities.
Financial performance
MMG recorded total revenue of US$3,033.7 million and Earnings Before Interest, Tax, Depreciation, Amortisation (EBITDA) of US$1,379.7 million. Financial performance was impacted by lower zinc prices, the ongoing impact of COVID-19 and community blockades at Las Bambas which reduced sales volumes.
“The first half of 2020 was particularly challenging. However, our strong COVID-19 risk management, improved operational and financial performance and a recovery in commodity prices enabled us to deliver a US$93.3 million profit attributable to equity holders in the six months to 31 December 2020,” said Mr Gao. Full year net cashflow from operating activities increased by 19% to US$1,358.2 million, further supporting a reduction in borrowings of US$453.3 million.
Total capital expenditure for 2020 was US$516.6 million. This was below initial guidance, reflecting COVID-19 impacts on the progress of key Las Bambas capital projects. Much of this expenditure will now fall into 2021. Total capital expenditure for 2021 is expected to be between US$750.0 and US$800.0 million, inclusive of capitalised mining. This includes the development of the Chalcobamba pit, third ball mill construction and tailings dam works. In 2021 we will continue to advance our objective of generating further value from our existing operations as we look to grow our business.
Strategy and outlook
“In 2020, we continued our business-wide transformation program, touching on every area of our operations from our culture and values to our daily operating processes. Our focus remains on boosting our operational performance, generating greater efficiency and value from our activities and improving shareholder returns,” said Mr Gao.
“Looking ahead to 2021, we expect that the challenges brought on by the global pandemic will remain in the near term. Nevertheless, our confidence in the outlook for our core commodities is supported by the broader global trends of clean energy, a shift to greater vehicle electrification and increased global economic stimulus which will sustain recent commodity price rises.”
MMG is well positioned for strong financial performance and growth as we look to commence mining at the Las Bambas Chalcobamba pit, the next phase of development at Kinsevere, potential life or operational extension at Dugald River and Rosebery and encouraging drilling results from exploration programs around our existing operating hubs.