Regulated Information
2 August 2017 at 07:00 CEST
HIGHLIGHTS:
-
Group underlying EBITDA[1] of EUR 111
million for H1 2017, an increase of EUR 21 million on H1 2016,
primarily due to a 50% increase in the average zinc price (USD
1,799/t to USD 2,690/t) and strengthening of the USD, partially
offset by lower treatment charge terms and reduced production at
Port Pirie
-
Metals Processing underlying EBITDA of EUR 117
million, up EUR 13 million year-on-year, driven primarily by higher
commodity prices, partially offset by lower zinc treatment charges
and reduced lead and by-product production; and
-
Substantially improved Mining underlying EBITDA
of EUR 15 million, up EUR 14 million year-on-year, driven by higher
commodity prices and lower treatment charges partially offset by
negative EBITDA contribution from the restart of the Middle
Tennessee Mines
-
Reinforced balance sheet
-
Net debt excluding zinc metal prepay and
perpetual securities of EUR 986 million at the end of H1 2017, no
change from 31 March 2017, predominantly due to USD 100 million of
new silver prepays completed in Q2 2017 to roll forward prepays
which are amortising in 2017. Net debt inclusive of zinc metal
prepay and perpetual securities of EUR 1.243 billion at the end of
H1 2017, a reduction of EUR 29 million on 31 March 2017
-
Successful placement of leverage neutral EUR
400m notes due 2024 in March 2017 and EUR 100m upsize of SCTF
facility in April 2017 to enhance credit, extend maturities and
improve liquidity
-
Further protective hedges placed for zinc price
and foreign exchange to reduce downside risk
-
Port Pirie Redevelopment remains on schedule for
hot commissioning to commence by the end of September 2017 with
first feed of the new TSL furnace commencing in October 2017 and
total project cost of approximately AUD 660 million
-
Middle Tennessee Mines restart and ramp-up ahead
of schedule with zinc in concentrate production of 5kt in H1 2017;
restart of Myra Falls approved by the board; and Latin American
mining assets sold
-
Safety improvements across the group with the
following milestones met - one million working hours recordable
injury free at Auby, one million working hours lost time injury
free at Port Pirie and no lost time injuries at the Middle
Tennessee Mines restart
-
Strategic priorities remain to deliver the Port
Pirie Redevelopment, optimise North American mining operations
including the restart of Myra Falls and zinc smelting optimisation
review
Commenting on the
first half 2017 results, Hilmar Rode, Chief Executive Officer
said:
"This was a solid half of production results for the zinc smelting
and mining operations. Zinc metal production was a slight beat
against the same period last year, even though production in Q2
2017 was impacted by a series of planned maintenance shuts at
Balen, Budel and Hobart. Production of lead and by-products during
H1 2017 was negatively impacted by unplanned outages at Port Pirie
in Q1 2017 with issues at the old acid plant and blast furnace.
These issues have now largely been resolved.
We have continued to progress our
strategic initiatives in H1 2017, completing a review of our North
American mining operations to identify their full potential and
optimising the Port Pirie Redevelopment to accelerate and de-risk
the project. We are pleased that the Port Pirie Redevelopment
remains on track for hot commissioning by the end of September
2017. The review of our zinc smelting network to identify operating
performance improvements is underway and we expect to have this
largely completed in the current quarter.
The financial performance of the
Company has been supported by the strong zinc market fundamentals
which have provided zinc prices that are 50% higher than the same
period last year. However, the Company still faces a number of
headwinds in the form of a lower zinc benchmark treatment charge
and the current weakening of the US dollar against the Euro. In
this light, it is extremely important that we continue to progress
against our clear set of strategic priorities to further strengthen
and transform the business.
In H1 2017, our balance sheet has
been substantially reinforced by the issuance of EUR 400 million of
senior unsecured notes with a 7 year tenor in March 2017; the EUR
100 million upsize of the SCTF facility in April 2017 to EUR 500
million; and rolling our silver prepays with two additional silver
prepay transactions completed in Q2 2017. These initiatives have
significantly improved our liquidity to EUR 718 million and
extended our average bond maturity to 4.25 years. During H1 2017,
protective zinc price hedges have been put in place for 70% of
Nyrstar's total free metal production through to the end of H1 2018
as well as protective foreign exchange hedges on CAD/USD and
AUD/USD transactional exposure. We will continue to monitor the
market for additional opportunistic financings and will apply
strategic hedges to limit downside risks for key commodity price
and foreign exchange sensitivities on a rolling six to nine month
basis during the implementation of the Company's transformation and
turnaround plan.
The strategic priorities for the
second half of the year and into 2018 will be to deliver the Port
Pirie Redevelopment and start the ramp up to design capacity;
complete the full potential review of our zinc smelting network;
and begin to deliver a substantial earnings uplift from the North
American mining operations with the optimisation of the Tennessee
and Langlois operations and the restart of the Myra Falls
mine."
CONFERENCE
CALL
Management will discuss this statement in a conference call with
the investment community on 2 August 2017 at 9:00am Central
European Summer Time. The presentation will be webcast live and
will also be available in archive. The webcast can be accessed via
http://edge.media-server.com/m/p/vvqd85os.
KEY FIGURES
EUR million (unless otherwise indicated) |
H1 |
H1 |
% |
|
2016 |
2017 |
Change |
Income Statement Summary |
|
|
|
Revenue |
1,321 |
1,806 |
37% |
Gross
Profit |
472 |
555 |
18% |
Direct
operating costs |
(385) |
(445) |
16% |
Non-operating and other |
3 |
2 |
(33%) |
Underlying EBITDA |
|
|
|
Metals
Processing Underlying EBITDA |
104 |
117 |
13% |
Mining
Underlying EBITDA |
1 |
15 |
1400% |
Other and Eliminations Underlying EBITDA |
(15) |
(22) |
47% |
Group Underlying EBITDA |
90 |
111 |
23% |
Underlying EBITDA margin |
7% |
6% |
(14%) |
Embedded
derivatives |
(4) |
(2) |
(50%) |
Restructuring expense |
(1) |
(1) |
0% |
M&A
related transaction expense |
(1) |
0 |
(100%) |
Result on
the disposal of subsidiaries |
(0) |
(2) |
100% |
Other income |
- |
7 |
100% |
Underlying adjustments |
(6) |
2 |
(133%) |
Depreciation, depletion, amortisation |
(87) |
(77) |
(11%) |
Impairment loss |
(58) |
- |
(100%) |
Net
finance expense |
(53) |
(65) |
23% |
Net
foreign exchange (loss)/gain |
(4) |
(35) |
775% |
Income
tax (expense) / benefit |
(23) |
9 |
(139%) |
Profit /
(Loss) from continuing operations |
(142) |
(56) |
(61%) |
Profit /
(Loss) from discontinued operations |
(100) |
35 |
(135%) |
Profit / (Loss) for the period |
(242) |
(21) |
(91%) |
Basic
Loss per share (EUR) |
(2.98) |
(0.22) |
(93%) |
Capex |
|
|
|
Metals
Processing |
118 |
140 |
19% |
Mining |
6 |
19 |
217% |
Group Capex |
125 |
161 |
29% |
Cash Flow |
|
|
|
Cash flow
from operating activities before working capital changes |
54 |
89 |
65% |
Working
capital and other changes |
(69) |
19 |
(128%) |
|
31 Dec 2016 |
30 Jun 2017 |
|
Loans and borrowings,
end of the period |
992 |
1,081 |
9% |
Zinc Prepay |
170 |
118 |
(31%) |
Perpetual
Securities |
132 |
139 |
5% |
Cash and cash
equivalents, end of period |
(127) |
(95) |
(25%) |
Net
Debt Exclusive of Zinc Prepay and Perpetual Securities |
865 |
986 |
14% |
|
|
|
|
Net Debt Inclusive of Zinc Prepay and Perpetual
Securities |
1,167 |
1,243 |
7% |
|
|
|
|
EUR million
(unless otherwise indicated) [2] |
H1 |
H1 |
% |
|
2016 |
2017 |
Change |
|
|
|
|
Metals Processing Production |
|
|
|
Zinc metal ('000
tonnes) |
507 |
518 |
2% |
Lead metal ('000
tonnes) |
95 |
84 |
(12%) |
|
|
|
|
Mining Production |
|
|
|
Zinc in concentrate
('000 tonnes) |
50 |
53 |
6% |
|
|
|
|
Market[3] |
|
|
|
Zinc price
(USD/t) |
1,799 |
2,690 |
50% |
Lead price
(USD/t) |
1,731 |
2,221 |
28% |
Silver price
(USD/t.oz) |
15.82 |
17.32 |
9% |
Gold price
(USD/t.oz) |
1,221 |
1,238 |
1% |
EUR/USD average
exchange rate |
1.12 |
1.08 |
(4%) |
EUR/AUD
average exchange rate |
1.52 |
1.44 |
(5%) |
GROUP FINANCIAL
OVERVIEW
Revenue for H1 2017 of EUR 1,806 million was
up 37% on H1 2016, driven by higher zinc, lead, silver and gold
prices which were up 50%, 28%, 9% and 1% respectively, benefit of
stronger US dollar against Euro in H1 2017 versus H1 2016 and
increased production volumes in zinc smelting and mining.
Group gross
profit for H1 2017 of EUR 555 million was up 18% on H1 2016,
driven by higher production volumes in both Metals Processing and
Mining and higher zinc, lead, silver and gold prices and stronger
US dollar, partially offset by deteriorating benchmark zinc
treatment charge terms.
Direct operating
costs for H1 2017 of EUR 445 million increased 16% on H1 2016,
due to higher production volumes in both Metals Processing and
Mining and higher mining costs as a result of the restart of mining
operations at Middle Tennessee.
Group underlying
EBITDA (continuing operations) of EUR 111 million in H1 2017,
an increase of 23% on H1 2016, due to higher commodity prices and
stronger US dollar, partially offset by lower treatment charges and
lower production from Port Pirie.
Depreciation,
depletion and amortisation expense for H1 2017 of EUR 77
million was down 11% year-on year, largely driven by the mining
impairment charges taken in 2016.
Net finance
expense including foreign exchange for H1 2017 of EUR 65
million was up EUR 12 million on H1 2016 primarily due to net debt
exclusive of zinc prepay and perpetual securities increasing by 14%
and net debt inclusive of zinc prepay and perpetual securities
increasing by 7% compared to end December 2016. During H1 2017,
perpetual securities were drawn by only EUR 7 million as Nyrstar
needed to fund the capital expenditure overrun at Port Pirie,
communicated in February 2017, before drawing further perpetual
securities. At the end of H1 2017, an aggregate total net of debt
issue costs of EUR 139 million (AUD 219 million) of perpetual
securities had been drawn for the Port Pirie Redevelopment
funding.
Income tax
benefit (including discontinued operations) for H1 2017 of
EUR 9 million (H1 2016: income tax expense of EUR 23 million from
continuing operations and EUR 6 million from discontinued
operations) due to recognition of losses, representing an effective
tax rate of 29.4% (H1 2016: (13.9%)). The effective tax rate for H1
2017 was impacted by losses incurred by Nyrstar, including the
discontinued operations, for which no tax benefit has been
recognised.
Loss from
continuing operations in H1 2017 of EUR 56 million, compared to
a net loss of EUR 142 million in H1 2016, mainly as a result of the
impairment charges related to Mining assets in H1 2016.
Capital
expenditure (continuing operations) was EUR 161 million in H1
2017, representing an increase of 29% year-on-year driven by a EUR
22 million increase in Metals Processing due to the large planned
maintenance shuts in Q2 2017 at Budel, Balen and Hobart and EUR 13
million capex increase in Mining with the restart of the Middle
Tennessee mines, compared to H1 2016 at EUR 125 million.
Cash flow from
operating activities before working capital changes of EUR 89
million in H1 2017 was up 65% compared to EUR 54 million in H1 2016
and cash in-flow from changes in working capital and other balance
sheet movements in H1 2017 of EUR 19 million was up 128%
compared to an out-flow of EUR 69 million in H1 2016, resulting in
total cash in-flow from operating activities for H1 2017 of EUR 108
million compared to EUR 15 million outflow for H1 2016. The
increase in net working capital levels was driven primarily by an
increase in inventory valuation due to higher commodity prices,
including the effect on inventory balance from zinc price increases
of approximately EUR 46 million for H1 2017.
Net
debt at the end of H1 2017, excluding the zinc metal
prepay and perpetual securities, was 14% higher compared to the end
of 2016 at EUR 986 million (EUR 865 million at the end of 2016).
The net debt inclusive of the zinc metal prepay and perpetual
securities at the end of H1 2017 was EUR 1,243 million, up 7%
compared to the end of 2016. Cash balance at the end of H1 2017 was
EUR 95 million compared to EUR 127 million at the end of 2016 with
proforma liquidity at the end of H1 2017 of EUR 718 million which
includes the upsize of the Structured Commodity Trade Finance
Facility completed at the end of April 2017.
ZINC CONCENTRATES
Zinc concentrate 2017 benchmark treatment charges were settled at
the end of Q1 2017 on the following terms:
- Base TC USD 172 per dmt (dry metric
tonne) of concentrate at basis price of USD 2,800 per
tonne;
- Escalator of 0% from zinc price above USD
2,800 per tonne; and
- De-escalator of 0% from zinc price
below USD 2,800 per tonne.
Nyrstar concluded its negotiations
with all benchmark and non-benchmark suppliers by April 2017. The
2017 benchmark zinc concentrate treatment charge represents a base
TC decrease of approximately 15% on the 2016 headline treatment
charge of USD 203 per dmt, basis price USD 2,000 per tonne.
The vast majority (90-95%) of
Nyrstar's concentrate requirements for 2017 are priced at benchmark
terms or by reference to the benchmark with a discount applied. The
average discount to the benchmark realized by Nyrstar in H1 2017
has been slightly larger than in H1 2016 and the past several
years. In H1 2017, the average discount to the realized zinc
treatment charge achieved by Nyrstar's Metals Processing operations
was approximately USD 40-50 per tonne and was in-line with the
discount realized in Q2 to Q4 2016. The same discount is expected
to be realized over the course of H2 2017.
SAFETY, HEALTH AND
ENVIRONMENT
"Prevent Harm" is a core priority of Nyrstar. The Company is
committed to maintaining safe operations and to proactively
managing risks including with respect to people and the
environment. At Nyrstar, we work together to create a workplace
where all risks are effectively identified and controlled and
everyone goes home safe and healthy each day of their working
life.
The lost time injury rate (LTIR)
for the Company in H1 2017 was 1.8, similar to the rate of 1.7 in
H1 2016. The frequency rate of cases with time lost or under
restricted duties (DART) and the frequency rate of cases requiring
at least a medical treatment (RIR) declined by 11% and 3% compared
to H1 2016.
Nyrstar achieved a number of
significant safety milestones in H1 of 2017. These milestones
included the Auby smelter reaching one million working hours
recordable injury free (the first time at Nyrstar that an
operational site achieved such a milestone); the Port Pirie
Redevelopment project completed one million working hours lost time
injury free; and the Middle Tennessee Mines were restarted with no
lost time injuries.
No environmental events with
material business consequences or long-term environmental impacts
occurred during H1 2017.
OPERATIONS REVIEW: METALS
PROCESSING
EUR
million |
H1 |
H1 |
% |
(unless otherwise indicated) |
2016 |
2017 |
Change |
|
|
|
|
Treatment charges |
189 |
171 |
(10%) |
Free metal
contribution |
109 |
182 |
67% |
Premiums |
77 |
79 |
3% |
By-Products |
79 |
79 |
0% |
Other |
(46) |
(56) |
22% |
Gross
Profit |
408 |
456 |
12% |
|
|
|
|
Employee expenses |
(112) |
(112) |
0% |
Energy expenses |
(89) |
(117) |
31% |
Other expenses
/income |
(102) |
(110) |
8% |
Direct Operating Costs |
(303) |
(339) |
12% |
|
|
|
|
Non-operating and other |
(1) |
0 |
(100%) |
Underlying EBITDA |
104 |
117 |
13% |
|
|
|
|
Sustaining |
42 |
59 |
40% |
Growth |
10 |
13 |
30% |
Port Pirie
Redevelopment |
66 |
67 |
2% |
Metal Processing Capex |
118 |
140 |
19% |
Metals Processing delivered an
underlying EBITDA result of EUR 117 million in H1 2017, an increase
of 13% over H1 2016 due to higher commodity prices and a stronger
USD, partially offset by lower zinc treatment charges, higher
energy prices and reduced lead and by-product production.
Gross profit year-over-year was up
12% at EUR 456 million in H1 2017 and was mainly driven by higher
commodity prices with zinc, lead and silver up 50%, 28% and 9%
respectively and higher zinc metal production (up 2%) which was
partially offset by a 15% decrease in the annual zinc benchmark
treatment charges.
Direct operating costs
year-over-year were up 12% at EUR 339 million, predominantly due to
higher energy costs which increased by 31% compared to H1 2016.
Energy costs at Port Pirie increased period-over-period by
approximately EUR 14 million due to higher coking coal prices and
by approximately EUR 17 million across the zinc smelters due to
higher electricity prices.
Sustaining capital spend in H1
2017 increased by 19% on H1 2016, in-line with the higher
sustaining capital expenditure guidance provided for 2017 (EUR 100
million to EUR 135 million) compared to 2016 (EUR 97 million).
EUR |
H1 |
H1 |
% |
DOC/tonne |
2016 |
2017 |
Change |
|
|
|
|
Auby |
504 |
460 |
(9%) |
Balen/Overpelt |
474 |
514 |
8% |
Budel |
345 |
377 |
9% |
Clarksville |
470 |
514 |
9% |
Hobart |
437 |
478 |
9% |
Port
Pirie[4] |
607 |
849 |
40% |
DOC/tonne[5] |
503 |
562 |
12% |
Direct operating costs per tonne
increased by 12% in H1 2017 compared to H1 2016 due to increased
energy prices which were partially offset by ongoing efficiency
improvements across Metals Processing. The direct operating costs
per tonne at Port Pirie increased by 40% in H1 2017 compared to the
same period in 2016 due to increased energy prices, lower
production volumes and unplanned maintenance outages.
|
H1 |
H1 |
% |
|
2016 |
2017 |
Change |
|
|
|
|
Zinc
metal ('000 tonnes) |
|
|
|
Auby |
70 |
82 |
17% |
Balen/Overpelt |
124 |
117 |
(6%) |
Budel |
141 |
140 |
(1%) |
Clarksville |
56 |
59 |
5% |
Hobart |
117 |
121 |
3% |
Total |
507 |
518 |
2% |
|
|
|
|
Lead
metal ('000 tonnes) |
|
|
|
Port Pirie |
95 |
84 |
(12%) |
|
|
|
|
Other
products |
|
|
|
Copper cathode ('000
tonnes) |
2.4 |
2.0 |
(17%) |
Silver (million troy
ounces) |
8.6 |
6.4 |
(26%) |
Gold ('000 troy
ounces) |
31.9 |
35.3 |
11% |
Indium metal
(tonnes) |
- |
9.7 |
100% |
Sulphuric acid ('000
tonnes) |
692 |
652 |
(6%) |
Metals Processing produced
approximately 518,000 tonnes of zinc metal in H1 2017, in-line with
full year 2017 guidance, representing a 2% increase on H1 2016. The
increase in zinc metal production year-over-year was despite the
planned maintenance shuts at Balen and Budel in Q2 2017 which
negatively impacted production by approximately 11,000 tonnes and
6,500 tonnes of zinc metal respectively. Hobart also commenced its
planned maintenance shut of its roasting and acid departments at
the end of June 2017. The Hobart planned maintenance shut was
completed by the end of July 2017 with a production impact of
approximately 5,500 tonnes of zinc metal which will impact Q3 2017
production volumes.
Zinc metal production at Auby was
up 17% as a result of a planned cellhouse shutdown in Q1 2016;
Balen was down 6% due to a planned 19 day cellhouse shutdown in May
2017; and Clarksville was up 5% primarily due to a higher
proportion of feed being sourced from the East Tennessee mines.
Indium production at Auby recommenced during Q1 2017 with
production of 9.7 tonnes during H1 2017. The indium production had
ceased at Auby since November 2015 due to damage caused by a fire
in the indium plant. Indium production is expected to ramp-up to
approximately 70 tonnes per annum over the coming year.
Lead market metal production at
Port Pirie of 84kt was 12% lower compared to H1 2016 due to a slow
blast furnace rate resulting from a heat exchanger failure in the
old acid plant and operational issues in the sinter plant that have
negatively affected sinter quality. Production was also impacted by
a 12 day blast furnace outage to repair leaking water jackets and a
damaged fume hood. These issues have now been largely resolved.
Copper and silver production was lower in H1 2017 by 17% and 26%
respectively whilst gold production was up 11%. The variance in the
production of copper, silver and gold is mainly due to a different
feed mix consumed with lower copper and silver and higher gold
contained.
Sulphuric acid production of
652,000 tonnes in H1 2017 was down by 6% compared to H1 2016. This
reduction in sulphuric acid production is primarily due to a 35%
reduction in sulphuric acid production at Port Pirie. Reduced acid
production at Port Pirie is due to the 12 day blast furnace outage
and substantial repairs in January 2017 that have been necessary
for the end-of-life acid plant which is due to be replaced with the
Port Pirie Redevelopment work.
OPERATIONS REVIEW: MINING
EUR
million |
H1 |
H1 |
% |
(unless otherwise indicated) |
2016[6] |
2017 |
Change |
|
|
|
|
CONTINUING OPERATIONS |
|
|
|
|
|
|
|
Treatment charges |
(15) |
(10) |
(33%) |
Payable metal
contribution |
72 |
105 |
46% |
By-Products |
9 |
9 |
0% |
Other |
(4) |
(6) |
50% |
Gross
Profit |
61 |
98 |
61% |
|
|
|
|
Employee expenses |
(32) |
(38) |
19% |
Energy expenses |
(7) |
(10) |
43% |
Other expenses |
(25) |
(36) |
44% |
Direct Operating Costs |
(64) |
(85) |
33% |
|
|
|
|
Non-operating and
other |
3 |
2 |
(33%) |
Underlying EBITDA |
1 |
15 |
1400% |
|
|
|
|
Sustaining |
3 |
9 |
200% |
Exploration and
development |
3 |
11 |
267% |
Growth |
- |
- |
|
Mining Capex |
6 |
19 |
217% |
Mining underlying EBITDA of EUR 15
million in H1 2017 was EUR 14 million higher than in H1 2016 due to
the higher zinc price, lower zinc treatment charge terms and
operational improvements. The Mining result excludes the underlying
EBITDA impact of Contonga, El Mochito, El Toqui, Coricancha and
Campo Morado, which have been eliminated as discontinued operations
due to their announced divestment. Myra Falls being on suspension
and the Middle Tennessee Mines which were in the process of restart
in H1 2017, contributed EBITDA of negative EUR 6 million and
negative EUR 5 million respectively in H1 2017. As at the start of
H2 2017, the Middle Tennessee mines are contributing positive
EBITDA.
Mining capital expenditure in H1
2017 was EUR 19 million, up EUR 13 million year-on-year, due
primarily to the re-start of the Middle Tennessee mines which
commenced in December 2016. Mining capex excludes the Contonga,
Coricancha, El Toqui, El Mochito and Campo Morado operations which
have been eliminated from the results as discontinued mining
operations.
|
H1 |
H1 |
% |
DOC USD/tonne ore milled |
2016 |
2017 |
Change |
|
|
|
|
Langlois |
86 |
130 |
51% |
East Tennessee |
36 |
42 |
17% |
Middle
Tennessee |
|
77 |
100% |
Average DOC/tonne ore milled |
45 |
60 |
33% |
'000
tonnes |
H1 |
H1 |
% |
unless otherwise indicated |
2016 |
2017 |
Change |
|
|
|
|
CONTINUING OPERATIONS |
|
|
|
Total
ore milled[7] |
1,181 |
1,366 |
16% |
|
|
|
|
Zinc
in Concentrate |
|
|
|
Langlois |
19 |
16 |
(16%) |
East Tennessee |
31 |
32 |
3% |
Middle
Tennessee |
- |
5 |
100% |
Total |
50 |
53 |
6% |
|
|
|
|
Other
metals |
|
|
|
Copper in
concentrate |
1.1 |
0.9 |
(18%) |
Silver ('000 troy
oz) |
307 |
271 |
(12%) |
Gold ('000 troy
oz) |
1.0 |
0.8 |
(20%) |
Nyrstar's continuing Mining
operations produced approximately 53kt of zinc in concentrate in H1
2017, an increase of 6% compared to H1 2016. Production at Langlois
was impacted due to a lack of development which is currently being
addressed and two unplanned production outages in Q1 2017 to repair
a motor hoist and conduct work in the well. The Middle Tennessee
mine re-started its mill production ahead of its previously
communicated schedule with the mill processing 5kt of zinc in
concentrate in the period of May to June 2017. The Middle Tennessee
Mines are forecast to achieve full capacity of 50kt per annum of
zinc in concentrate by November 2017.
OTHER DEVELOPMENTS
Mining Divestment
Process
Over the course of H1 2017, the Company has been progressing the
Mine divestment process by completing customary closing conditions
relating to the sales of the Contonga mine in Peru and various
mineral claims located in Quebec, Canada, the Campo Morado mine in
Mexico and the Coricancha mine in Peru. The closing conditions for
the sale of the minerals claims located in Quebec and those for
Campo Morado were completed in April 2017, Coricancha was completed
in July 2017 and Contonga is expected to be satisfied during the
course of Q3 2017.
At the end of H1 2017, Nyrstar had
sold all five of its mining assets in Latin America with a total
cash consideration of USD 72 million (USD 40m upfront and USD 32m
in contingent milestone payments). During the course of H1 2017,
Nyrstar has completed a full potential review of the North American
mining portfolio and is rolling out optimisation plans for all four
of the mining assets. The mines, including the Myra Falls mine
which is commencing its restart in August 2017, are positioned to
ramp-up to 200kt per annum of zinc in concentrate production and
deliver continued improvements in operating costs.
Port Pirie
Redevelopment
As at 30 June 2017, capex incurred at Port Pirie was AUD 609
million with AUD 627 million committed, AUD 219 million drawn under
the perpetual securities and AUD 73 million remaining to be
drawn.
As communicated by the Company on
9 February 2017, a comprehensive review of the Port Pirie
Redevelopment project has been undertaken and completed to ensure
that the scope, flow sheet and commissioning will provide Port
Pirie with industry leading performance.
Management's review has confirmed
that the Port Pirie Redevelopment is the right strategy for the
Company as it will have a significant positive long-term effect on
Nyrstar's operations and deliver a substantial earnings uplift.
However, the review also identified that rework is required to the
fabrication of key module components, which delayed the start of
hot commissioning to the end of September 2017 as previously
reported. Also as part of the review, a number of engineering
improvements have been identified that will unlock additional
value. Port Pirie is at a stage where the identified improvements
can still be implemented effectively ahead of the hot commissioning
milestone scheduled to commence in September 2017 and the first
feed of the TSL furnace in October 2017.
In H1 2017, the Port Pirie
Redevelopment has focused on completing the rework referred to
above and enhancing the slag tapping arrangements on the TSL
furnace whilst completing the modular construction and progressing
the commissioning of the new infrastructure and related control
systems. In addition, training commenced of Nyrstar personnel at
the Kazzinc lead smelting operations in Kazakhstan. The lime plant
commissioning and the piling for the relocation of the slag caster
was completed during Q2 2017.
Nyrstar reaffirms that the
incremental EBITDA uplift from the redevelopment, using 2016 as a
basis, will increase from the previous full ramp-up guidance of EUR
80 million per annum and is expected to be in the region of EUR 40
million in 2018, EUR 100 million in 2019 and EUR 130 million per
annum from 2020. The expected cost to complete the redevelopment is
also reaffirmed as AUD 660 million.
SENSITIVITIES
Nyrstar's results continued to be
significantly affected during the course of H1 2017 by changes in
metal prices, exchange rates and treatment charges. Sensitivities
to variations in these parameters are depicted in the below table,
which sets out the estimated impact of a change in each of the
parameters on Nyrstar's H1 2017 underlying EBITDA based on the
actual results and production profile for the half year ending 30
June 2017.
|
|
|
Estimated annualised H1 2017 underlying EBITDA impact
(EURm) |
Parameter |
H1 2017 Annual Average price/rate |
Variable |
Metals Processing |
Mining |
Group |
|
|
|
|
|
|
EUR:USD |
1.08 |
-/+ 10% |
+83/(68) |
+19/(15) |
+101/(83) |
Zinc price |
$2,690/t |
-/+ 10% |
(34)/+45 |
(18)/+18 |
(52)/+63 |
Zinc TC |
$172/dmt |
-/+ 10% |
(25)/+25 |
+3/(3) |
(22)/+22 |
EUR:AUD |
1.44 |
-/+ 10% |
(31)/+26 |
- |
(31)/+26 |
Silver Price |
$17.32/oz |
-/+ 10% |
(4)/+4 |
(1)/+1 |
(5)+5 |
Copper price |
$5,749/t |
-/+ 10% |
(2)/+2 |
(1)/+1 |
(3)+3 |
Gold Price |
$1,238/oz |
-/+ 10% |
(1)/+1 |
- |
(1)+1 |
Lead price |
$2,221/t |
-/+ 10% |
(1)/+1 |
- |
(1)/+1 |
Lead TC |
$138/dmt |
-/+
10% |
(3)/+3 |
- |
(3)/+3 |
EUR:CHF |
1.08 |
-/+ 10% |
- |
- |
(6)/+5 |
The above sensitivities were
calculated by modelling Nyrstar's H1 2017 underlying operating
performance. Each parameter is based on an average value observed
during that period and is varied in isolation to determine the
full-year underlying EBITDA impact.
Sensitivities are:
-
Dependent on production volumes and the economic
environment observed during the reference period.
-
Not reflective of simultaneously varying more
than one parameter; adding them together may not lead to an
accurate estimate of financial performance.
-
Expressed as linear values within a relevant
range. Outside the range listed for each variable, the impact of
changes may be significantly different to the results
outlined.
These sensitivities should not be
applied to Nyrstar's results for any prior periods and may not be
representative of the underlying EBITDA sensitivity of any of the
variations going forward.
During the implementation of the
implementation of the transformation and turnaround strategy,
Nyrstar has taken prudent measures to mitigate downside risk on
zinc prices and key currencies.
In Q1 2017, Nyrstar had in place
zinc price collar hedges to protect 70% of total free metal
produced within a price range of USD 2,127 and USD 2,496 with full
upside from USD 2,800; and for Q2 2017 to Q4 2017, a collar of USD
2,172 to USD 2,543. At the end of Q2 2017, protective hedges were
put in place for 70% of the total free metal produced by Nyrstar's
Metals Processing segment (8,300 tonnes of zinc metal per month)
and Mining segment (7,500 tonnes per month of the payable zinc
metal produced in concentrate) for H1 2018. These hedges result in
full exposure to the zinc price for 100% of the production volume
in H1 2018 between a floating zinc price of USD 2,300/t and
USD 3,094/t. Above and below these prices, Nyrstar's exposure
is limited to 30% of the total free metal produced.
Since H1 2016, Nyrstar has entered
into a series of foreign exchange options to hedge the Company's
monthly exposure related to the direct operating costs denominated
in Australian dollars (AUD), Canadian Dollars (CAD) and in Euro
(EUR) utilising put and call collar structures. For the EUR/USD
transactional exposure, various collars have been executed
resulting in a weighted average collar of 1.05 to 1.14 for
approximately 100% of the total transactional expenses for H1 2017;
and a weighted average collar of 1.00 to 1.10 for approximately
100% of the total transactional expenses for H2 2017. For the
AUD/USD transactional exposure, various collars have been executed
resulting in a weighted average collar of 0.62 to 0.81 for
approximately 100% of the total transactional expenses for H1 2017;
a weighted average collar of 0.68 to 0.81 for approximately
100% of H2 2017; and a weighted average collar of 0.68 to 0.80 for
approximately 33% of 2018. For the CAD/USD transactional exposure
on Langlois, various collars have been executed resulting in a
weighted average collar of 1.28 to 1.35 for approximately 70% of
2017 and a weighted average collar of 1.32 to 1.36 for
approximately 100% of 2018.
FORWARD-LOOKING
STATEMENTS
This release includes forward-looking statements that reflect
Nyrstar's intentions, beliefs or current expectations concerning,
among other things: Nyrstar's results of operations, financial
condition, liquidity, performance, prospects, growth, strategies
and the industry in which Nyrstar operates. These forward-looking
statements are subject to risks, uncertainties and assumptions and
other factors that could cause Nyrstar's actual results of
operations, financial condition, liquidity, performance, prospects
or opportunities, as well as those of the markets it serves or
intends to serve, to differ materially from those expressed in, or
suggested by, these forward-looking statements. Nyrstar cautions
you that forward-looking statements are not guarantees of future
performance and that its actual results of operations, financial
condition and liquidity and the development of the industry in
which Nyrstar operates may differ materially from those made in or
suggested by the forward-looking statements contained in this news
release. In addition, even if Nyrstar's results of operations,
financial condition, liquidity and growth and the development of
the industry in which Nyrstar operates are consistent with the
forward-looking statements contained in this news release, those
results or developments may not be indicative of results or
developments in future periods. Nyrstar and each of its directors,
officers and employees expressly disclaim any obligation or
undertaking to review, update or release any update of or revisions
to any forward-looking statements in this report or any change in
Nyrstar's expectations or any change in events, conditions or
circumstances on which these forward-looking statements are based,
except as required by applicable law or regulation.
About
Nyrstar
Nyrstar is a global multi-metals business, with a market leading
position in zinc and lead, and growing positions in other base and
precious metals, which are essential resources that are fuelling
the rapid urbanisation and industrialisation of our changing world.
Nyrstar has mining, smelting and other operations located in
Europe, the Americas and Australia and employs approximately 4,300
people. Nyrstar is incorporated in Belgium and has its corporate
office in Switzerland. Nyrstar is listed on Euronext Brussels under
the symbol NYR. For further information please visit the Nyrstar
website: www.nyrstar.com.
For further information
contact:
Anthony
Simms |
Head of
Investor Relations |
T: +41 44
745 8157 |
M: +41 79
722 2152 |
anthony.simms@nyrstar.com |
Franziska
Morroni |
Head of
Corporate Communications |
T: +41 44
745 8295 |
M: +41 79
719 2342 |
franziska.morroni@nyrstar.com |
MINING PRODUCTION ANNEX
PE-
RI-
OD |
Pro-
duc-
tion
KPI
by
Si-
te |
Ore
mi-
lled
('000
to-
nnes) |
Mill
head
gra-
de |
Re-
co-
ve-
ry |
Con-
cen-
tra-
te |
Metal
in
con-
cen-
tra-
te |
Zinc
(%) |
Le-
ad
(%) |
Co-
pper
(%) |
Go-
ld
(g/t) |
Sil-
ver
(g/t) |
Zinc
(%) |
Le-
ad
(%) |
Co-
pper
(%) |
Go-
ld
(%) |
Sil-
ver
(%) |
Zinc
(kt) |
Le-
ad
(kt) |
Co-
pper
(kt) |
Zinc
(kt) |
Le-
ad
(kt) |
Co-
pper
(kt) |
Gold
(k'toz) |
Sil-
ver
(m'toz) |
CON-
TI-
NUING
O-
PE-
RA-
TIONS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1
20
16 |
Lan-
glois |
222 |
8.
89% |
- |
0.
72% |
0.
18 |
49.
28 |
95.
2% |
- |
71.
1% |
78.
5% |
87.
4% |
36 |
- |
4.
5 |
18.
8 |
- |
1.
1 |
1.0 |
307 |
East
Tennessee |
959 |
3.
49% |
- |
- |
- |
- |
93.
1% |
- |
- |
- |
- |
51 |
- |
- |
31.
2 |
- |
- |
- |
- |
Mi-
ddle
Tennessee |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
- |
Mi-
ning
Total |
1,
181 |
4.
51% |
- |
0.
72% |
0.
18 |
49.
28 |
93.
5% |
- |
71.
1% |
78.
5% |
87.
4% |
86 |
- |
4.
5 |
49.
9 |
- |
1.
1 |
1.
0 |
307 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
H1
20
17 |
Lan-
glois |
202 |
8.
41% |
- |
0.
56% |
0.
16 |
47.
89 |
95.
0% |
- |
76.
2% |
78.
5% |
87.
0% |
30 |
- |
3.
6 |
16.
2 |
- |
0.
9 |
0.
8 |
271 |
East
Tennessee |
964 |
3.
48% |
- |
- |
- |
- |
95.
5% |
- |
- |
- |
- |
52 |
- |
- |
32.
1 |
- |
- |
- |
- |
Mi-
ddle
Tennessee |
200 |
2.
82% |
- |
- |
- |
- |
91.
0% |
- |
- |
- |
- |
8 |
- |
- |
5.
1 |
- |
- |
- |
- |
Mi-
ning
To-
tal |
1,
366 |
4.
12% |
- |
0.
56% |
0.
16 |
47.
89 |
94.
8% |
- |
76.
2% |
78.
5% |
87.
0% |
89 |
- |
3.
6 |
53.
4 |
- |
0.
9 |
0.
8 |
271 |
%
Chan-
ge |
Lan-
glois |
(9)
% |
(5)
% |
- |
(22)
% |
(12)
% |
(3)
% |
(0)
% |
- |
7
% |
- |
(0)
% |
(17)
% |
- |
- |
(16)
% |
- |
- |
- |
(12)
% |
East
Te-
nne-
ss-
ee |
1
% |
(0)
% |
- |
- |
- |
- |
3
% |
- |
- |
- |
- |
2
% |
- |
- |
3
% |
- |
- |
- |
- |
Mi-
ddle
Te-
nne-
ss-
ee |
100
% |
100
% |
- |
- |
- |
- |
100
% |
- |
- |
- |
- |
100
% |
- |
- |
100
% |
- |
- |
- |
- |
Mi-
ning
To-
tal |
16
% |
(9
)% |
- |
(22)
% |
(12)
% |
(3)
% |
1
% |
- |
7
% |
- |
(0)
% |
3
% |
- |
- |
6
% |
- |
- |
- |
(12)
% |
[1] Underlying
EBITDA is a non-IFRS measure of earnings, which is used by
management to assess the underlying performance of Nyrstar's
operations and is reported by Nyrstar to provide additional
understanding of the underlying business performance of its
operations. Nyrstar defines "Underlying EBITDA" as profit or loss
for the period adjusted to exclude loss from discontinued
operations (net of income tax), income tax (expense)/benefit, share
of loss of equity-accounted investees, gain on the disposal of
equity-accounted investees, net finance expense, impairment losses
and reversals, restructuring expense, M&A related transaction
expenses, depreciation, depletion and amortization, income or
expenses arising from embedded derivatives recognised under IAS 39
"Financial Instruments: Recognition and Measurement" and other
items arising from events or transactions clearly distinct from the
ordinary activities of Nyrstar. For a definition of other terms
used in this press release, please see Nyrstar's glossary of key
terms available at:
http://www.nyrstar.com/investors/en/Pages/investorsmaterials.aspx
[2] H1 2016
numbers were adjusted to exclude El Toqui, El Mochito, Campo
Morado, Contonga and Coricancha as the mines are sold or
reclassified as discontinued operation
[3] Zinc, lead
and copper prices are averages of LME daily cash settlement prices.
Silver/Gold price is average of LBMA daily fixing / daily PM
fixing, respectively
[4] Per tonne
of lead metal and zinc contained in fume
[5] DOC/tonne
calculated based on segmental direct operating costs and total
production of Zinc and Lead Market Metal
[6] H1 2016
numbers were adjusted to exclude Campo Morado, El Toqui, El
Mochito, Contango and Coricancha as the mines are sold or
reclassified as discontinued operation
[7] Mining
production for both years was adjusted to exclude Contonga
production volumes as it has been reclassified as a discontinued
operation. For production at discontinued operations refer to
annex
Press Release (English)
Press Release (Dutch)
This
announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the
information contained therein.
Source: Nyrstar via Globenewswire
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