Nyrstar operational and financial update
Nyrstar operational and financial update
1 February 2019 at 21.30
CET
Nyrstar NV ("Nyrstar" or the “Company”) today
provides an update on the ongoing capital structure review and
certain operational and financial matters including the Port Pirie
Redevelopment and expectations for full year 2018 Underlying
EBITDA.
Capital structure reviewThe
Nyrstar Board of Directors and management, with the assistance of
independent advisors from Alvarez & Marsal, Morgan Stanley and
Freshfields, are continuing the comprehensive review of the
Company's capital structure as previously announced. This review is
being led by a special independent committee of the Nyrstar Board
of Directors. As part of the review, Nyrstar has developed a new
five year business plan (the “Business Plan”) that provides the
basis for negotiations with financial stakeholders to establish a
robust and sustainable long term capital structure for the Company.
During the course of this week, Nyrstar has engaged in constructive
discussions with representatives of its various financial
stakeholder groups to work towards this objective in an accelerated
timeframe. Following these discussions, Nyrstar deems it
appropriate to update all stakeholders with this release.The
Company will make additional announcements as these discussions
progress, as appropriate.
Cyber-attackFurther to the
press release issued on 22 January 2019 advising that the Company
had been the subject of a targeted cyber-attack which had severely
impacted certain IT systems, including email and network servers
across Nyrstar's headquarters in Zurich, Switzerland and globally
at the Metals Processing and Mining operations, the Company can now
confirm that the cyber-attack was contained on 22 January 2019 and
Nyrstar's IT department, with assistance from key IT-partners and
global cyber security agencies, has been working on a technical
recovery plan over the past ten days. Nyrstar's IT systems,
including email correspondence and access to file servers, are
expected to return to normal operation during the course of the
coming week. Nyrstar's Metals Processing and Mining operations were
not materially impacted operationally by the cyber-attack.
Myra Falls ramp-up activitiesAs
communicated in the second interim management statement for 2018
that was published on 30 October 2018, the Myra Falls mine
commenced zinc production during September 2018. This production
was made possible due to the fact that the primary components of
the restart scope of works had been completed, including the
rehabilitation of the underground mines, the rebuilding and
refurbishment of the processing plant, repair of the underground
crusher, rehabilitation and upgrade of key infrastructure including
roads and loading facilities and upgrade of the underground fleet
of mobile equipment.
Following the restart, at the end of Q4 2018
Nyrstar was required to suspend ore extraction and production at
the mill to address deficiencies identified in compliance orders
from the Ministry for Energy, Mines & Petroleum Resources in
British Columbia. Nyrstar is currently working to address the
necessary repairs and production should resume by the end of Q1
2019 or during Q2 2019 at the latest. In the meantime, Nyrstar is
continuing with its underground development and remediation
activities at the Myra Falls mine.
Port Pirie Redevelopment - Operational
updateDuring the course of 2018, the new TSL furnace has
ramped-up successfully, including in terms of operating time,
volume of material treated and the proportion of high margin
residues in the feed. In H2 2018, the residue consumed in the TSL
feed was approximately 60% of the overall feed mix, exceeding the
fully ramped-up target of 40% residue in the feed. The volume of
material treated in the TSL furnace has also continued to increase
quarter-on-quarter during 2018 and will further increase during
2019.
In December 2018, the Company chose not to
operate the old sinter plant at Port Pirie in order to further
support reducing lead in air emissions which ended the year below
the defined limit. In addition, Nyrstar also performed maintenance
on the TSL furnace and blast furnace during December 2018. These
maintenance shuts were to address a TSL furnace cooling issue; and
to bring forward maintenance previously scheduled for the blast
furnace in January 2019. The TSL furnace resumed operation on 15
December 2018.
As the Port Pirie Redevelopment continues to
ramp-up, it will increasingly consume larger volumes of the
internally generated residues that have been stockpiled at Port
Pirie. Further internal residues are being generated for
consumption at Port Pirie, primarily by the Hobart zinc smelter,
and the Port Pirie site continues to generate zinc fume for
consumption at Hobart. Nyrstar is evaluating future projects to
improve throughput of the slag fumer and increase the ability of
the Port Pirie site to treat the higher halide content of certain
recycles that are consumed as feed for the plant.
Port Pirie Redevelopment -
Financial updateThe Underlying EBITDA generated in
the Metals Processing segment as a result of the Port Pirie
Redevelopment is subject to a number of macro variables, including,
but not limited to, metal prices, exchange rates, lead treatment
charge terms and energy prices, as well as operating performance.
Port Pirie’s Underlying EBITDA contribution also reflects the
valuation of the internally generated residues processed by Port
Pirie, in particular those arising from Hobart. The Metals
Processing segment profitability of both the Australian sites are
intrinsically linked by the raw material flows between the two
sites and are only possible due to the Port Pirie Redevelopment. In
the absence of the Port Pirie Redevelopment, the Hobart and Port
Pirie sites would both be non-operational and would not contribute
EBITDA to the Metals Processing segment.
In preparing its Business Plan, Nyrstar has
reforecast the expected Underlying EBITDA contribution from Port
Pirie and Hobart. The Business Plan, which is based on
modelled macro, operating and production assumptions (with no
additional constraints), indicates the following Underlying EBITDA
contribution included within the Metals Processing segment from the
two Australian smelters:
Pro-forma EBITDA EURm |
2019F |
2020F |
Port Pirie |
38 |
56 |
Hobart |
57 |
69 |
Australian Metals Processing |
95 |
125 |
Between 2016 and 2018, Nyrstar has built-up valuable, internally
generated, residue inventories at Port Pirie. This will
result in a significant working capital cash flow benefit as this
historical inventory is processed. In 2019, this cash flow
benefit is estimated at approximately EUR 70 million.
Group Underlying EBITDA
guidance and production update On 20 September 2018, the
Company issued a press release advising that the Group would likely
record an Underlying EBITDA result for H2 2018 that was materially
below the EUR 120 million result achieved in H1 2018. The Interim
Management Statement that was issued on 30 October 2018 reported a
Q3 2018 Underlying EBITDA of EUR 13 million due to a deterioration
in commodity prices, the impact of historically low zinc treatment
charges and increased energy costs in Europe. Over the course of Q4
2018, commodity prices, exchange rates and treatment charges were
at similar levels to those experienced in Q3 2018. However, energy
prices in Europe were higher and the Port Pirie site was impacted
by maintenance shuts for the majority of December
2018.
For primarily the above reasons, the Company
expects to report a total Underlying EBITDA result of approximately
EUR 110 million to EUR 130 million for full year 2018. The
Underlying EBITDA guidance contained in this announcement is an
unaudited estimate only and may change as the Company finalises its
year-end procedures.
Metals Processing produced approximately 1.06
million tonnes of zinc metal in 2018, slightly below the revised
full year 2018 guidance of 1.07 to 1.09 million tonnes,
representing a 4% increase on 2017. The increase in zinc metal
production year-over-year was despite the planned maintenance shuts
at Auby, Balen, Clarksville and Hobart; and was assisted by a lack
of material unplanned outages which had impacted production volumes
in 2016 and 2017. However, zinc and lead metal production was
impacted during Q4 2018 by lower raw material inventory.
|
FY |
FY |
% |
|
H1 |
H2 |
% |
|
2017 |
2018 |
Change |
|
2018 |
2018 |
Change |
|
|
|
|
|
|
|
|
Zinc
metal ('000 tonnes) |
|
|
|
|
|
|
|
Auby |
166 |
155 |
(6%) |
|
78 |
78 |
0% |
Balen/Pelt |
249 |
275 |
10% |
|
137 |
138 |
1% |
Budel |
248 |
268 |
8% |
|
133 |
136 |
2% |
Clarksville |
117 |
101 |
(14%) |
|
52 |
49 |
(5%) |
Hobart |
238 |
264 |
11% |
|
129 |
136 |
5% |
Total |
1,019 |
1,064 |
4% |
|
528 |
536 |
2% |
|
|
|
|
|
|
|
|
Lead
metal ('000 tonnes) |
|
|
|
|
|
|
|
Port
Pirie |
171 |
160 |
(7%) |
|
69 |
90 |
30% |
|
|
|
|
|
|
|
|
Other
products |
|
|
|
|
|
|
|
Copper cathode
('000 tonnes) |
4.2 |
4.3 |
1% |
|
1.6 |
2.7 |
65% |
Silver
(million troy ounces) |
13.6 |
13.8 |
1% |
|
4.9 |
8.9 |
8% |
Gold (‘000
troy ounces) |
72.6 |
73 |
1% |
|
25.7 |
47.3 |
84% |
Indium metal
(tonnes) |
29.8 |
42.6 |
43% |
|
21.4 |
21.2 |
(1%) |
Sulphuric acid
('000 tonnes) |
1,266 |
1,364 |
8% |
|
653 |
712 |
9% |
Nyrstar's Mining operations produced
approximately 139kt of zinc in concentrate in 2018, an increase of
14% compared to 2017. The total mine production of zinc in
concentrate in 2018 is marginally below the revised full year
guidance range of 140 to 150kt. This lower level of zinc in
concentrate production has been largely due to disappointing
production performance of the Langlois and the Middle Tennessee
mines and commercial production at the Myra Falls mine commencing
slightly later than had been originally anticipated at the start of
the year and the impact of the suspension of ore extraction at year
end to address deficiencies identified in compliance orders from
the Ministry for Energy, Mines & Petroleum Resources in British
Columbia.
'000
tonnes |
FY |
FY |
% |
|
H1 |
H2 |
% |
unless otherwise indicated |
2017 |
2018 |
Change |
|
2018 |
2018 |
Change |
|
|
|
|
|
|
|
|
Total
ore milled |
3,238 |
4,080 |
26% |
|
2,075 |
2,006 |
(3%) |
|
|
|
|
|
|
|
|
Zinc
in Concentrate |
|
|
|
|
|
|
|
Myra
Falls |
- |
0.6 |
- |
|
- |
0.6 |
- |
Langlois |
34 |
24 |
(31%) |
|
12 |
12 |
5% |
East
Tennessee |
66 |
76 |
15% |
|
36 |
40 |
12% |
Middle Tennessee |
22 |
39 |
75% |
|
22 |
17 |
(26%) |
Total |
123 |
139 |
14% |
|
70 |
70 |
0% |
|
|
|
|
|
|
|
|
Other
metals |
|
|
|
|
|
|
|
Copper in
concentrate |
2.1 |
1.6 |
(21%) |
|
0.8 |
0.9 |
7% |
Silver (‘000
troy oz) |
553 |
440 |
(20%) |
|
214 |
226 |
6% |
Gold (‘000
troy oz) |
1.9 |
2.0 |
4% |
|
0.7 |
1.3 |
72% |
Liquidity, working capital, strategic
zinc and foreign exchange hedgesNyrstar has continued to
experience working capital outflows during the period since the
Company’s announcement of 6 December 2018. The Company is
continuing to manage tightly its cash and inventory levels and is
evaluating additional measures to improve further its liquidity
position.
During the course of Q4 2018, the Company closed
out and crystallised the cash benefit of its 166kt of zinc metal
forward hedges for the Mining segment. A positive cash settlement
value of USD 82 million was collected in Q4 2018 and an Underlying
EBITDA benefit will be realised in the course of 2019. As from the
end of January 2019, Nyrstar has commenced lowering the strategic
transactional hedging ratio for its foreign exchange exposure. This
reduction in the strategic transactional hedging is primarily due
to a reduction in foreign exchange hedging line capacity.
Full Year 2018 reporting dateIn
order to align with the Company’s ongoing capital structure review
process, Nyrstar's consolidated financial statements for the twelve
months ended 31 December 2018, that were previously due to be
released on 21 February 2019, will now be rescheduled to 30 April
2019. The Annual General Meeting will be rescheduled to 25 June
2019.
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 4,100
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 - Group Manager Investor
Relations T: +41 44 745 8157 M: +41 79 722
2152 anthony.simms@nyrstar.com Franziska Morroni
- Group Manager Corporate Communications T: +41 44 745
8295 M: +41 79 719 2342 franziska.morroni@nyrstar.com
- Nyrstar staus and operational update 01022019 EN FINAL
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