ST HELIER, Jersey, August 26, 2016 /PRNewswire/ --
Consmin, a leading manganese ore producer with mining operations in Australia and Ghana, announces its annual results for the period ending 30 June 2016.
Commenting on the results, David Slater (CFO of Consmin) said:
"During the second quarter of 2016 Consmin's production decreased by 27% compared to the corresponding period in 2015. This reduction was due to the decision taken to suspend operations at the Australian Woodie Woodie mine with effect from 2nd February 2016 and commence the transition into care and maintenance. As a result production from Australia was 72% lower in the quarter with production only relating to limited processing of remaining ROM stockpiles. Production from our Nsuta mine in Ghana in the quarter, however, increased 15% compared to the corresponding period in 2015 underpinned by improved demand for the Company's Ghanaian ore.
The manganese C1 cash cost for the quarter was $1.30/dmtu, an improvement of 35% from $1.99/dmtu for Q2 2015. The C1 cash cost for Q2 2016 does not include any costs or production from the Australian operations due to them being placed on care and maintenance.
The company's manganese ore shipments totalled 628k dry tonnes during Q2 2016, a decrease of 10% compared to Q2 2015. Shipments of Australian manganese ore were limited to existing stockpiles in place at the time of the suspension of operations with sales efforts focussing on maximising revenue due to the improved pricing seen in Q2 2016 in comparison to that in Q1 2016. Sales tonnes from Ghana were 4% lower than in Q2 2015 due to the planned final shipment of June 2016 slipping into the first few days of July 2016. Including this vessel, sales of Ghanaian ore surpassed 2 million tonnes on an annualised basis during the quarter, which is in line with the Ghana record sales levels achieved in 2013.
The quarterly average 44% benchmark CIF price for manganese lump in Q2 2016 was $3.03/dmtu, up 46% from $2.07/dmtu in Q1 2016. This significant price rise was attributable to a very substantial drawdown of China's port stocks in Q1 2016, following the production curtailments from major ore suppliers, including the start of care and maintenance at our Woodie Woodie mine. As the result of an improvement in steel production and prices in China, ore suppliers were able to leverage reduced availability of manganese ore to push up prices aggressively, leading to high grade ore prices achieving levels over $4.00/dmtu in April and May. It should be noted that these price rises were not driven by market fundamentals but rather acute supply tightness and such prices began to unwind towards the end of Q2 with prices for high grade ores falling to below $3.00/dmtu for July shipments.
It seems likely that the recent price volatility will continue throughout the remainder of 2016 as market participants adjust to improved yet fragile steel prospects in China. Supplier discipline should continue to be the key factor although it remains difficult to predict. The Company is cautiously optimistic that the price lows seen in the early months of the year will not reoccur during the remainder of 2016.
Although the Company ended 2015 with net cash and cash equivalents of $76 million, the weakness of pricing for manganese ore in Q1 2016, as well as the costs associated with placing the Woodie Woodie mine into care and maintenance put further pressure on liquidity, with the Company's net cash and cash equivalents having reduced to US$39 million at 31 March 2016. As a result of the level and speed of depletion of the Group's liquidity the Company announced on 8 March 2016 that it anticipated discussions with holders of the 8.000% Senior Secured Notes due May 15, 2020 regarding these Notes, with discussions commencing in April 2016 to implement a solution to improve the Company's liquidity.
Following the announcement of its engagement with the noteholder committee the Company announced that it had elected to utilise the 30 day coupon grace period to further discussions and would not pay the coupon payment due on 15 May 2016. In June the Company announced it had entered into the Standstill and Lock-up Agreement with Noteholders representing 83% of the outstanding Notes who had agreed to support certain amendments to the Notes through a consent solicitation process. On 8 July the Company further announced an invitation to noteholders to consent to certain modifications of the terms and conditions of the Notes.
On 15 August the Company announced that it had received consents from 96.43% of the Noteholders and as a result is pleased with the outcome of the consent solicitation process and thanks the majority of Holders for their support. These amendments will have the beneficial effect of providing the Company with significant additional liquidity during the current period of low and volatile manganese prices."
About Consolidated Minerals Limited
Consmin is a leading manganese ore producer with mining operations in Australia and Ghana. The principal activities of the Company and its subsidiaries (the "Group") are the exploration, mining, processing and sale of manganese products. The Group's operations are primarily conducted through four major operating/trading subsidiaries; Consolidated Minerals Pty Limited (Australia), Ghana Manganese Company Limited (Ghana), Manganese Trading Limited (Jersey) and Pilbara Trading Limited (Jersey).
Consolidated Minerals Limited is headquartered in Jersey and the address of its office is Commercial House, 3 Commercial Street, St Helier, Jersey, Channel Islands, JE2 3RU.
For further information, please visit our website http://www.consmin.com
SOURCE Consolidated Minerals Ltd