May 26, 2017 - 9:57 AM EDT
Print Email Article Font Down Font Up
Consolidated Minerals Limited ('Consmin' or the 'Company') Report for the First Quarter ending 31 March 2017

ST HELIER, Jersey, May 26, 2017 /PRNewswire/ --

All figures in accordance with IFRS and in United States Dollars, unless otherwise stated Consmin, a leading manganese ore producer with mining operations in Australia and Ghana, announces its quarterly results for the period ended 31 March 2017.

Acquisition Update  

  • On 15 November 2016 the Company announced that its ultimate beneficial and legal owners ("Sellers") had entered into a share purchase agreement ("SPA") with China Tian Yuan Manganese Limited ("CTYML"), a subsidiary of Ningxia Tianyuan Manganese Industry Co., Ltd. ("TMI") pursuant to which the Sellers agreed to sell and transfer to CTYML all of their respective right and title to both the entire issued share capital of the Company and the shareholders funding given by them to the Company (the "Transaction"). The Transaction is conditional upon a number of conditions which are set out in the SPA, including, but not limited to, certain government consents and certain consents from the holders of the then outstanding US$400,000,000 Senior Secured Notes due 2020 (the "Notes").
  • On 4 April 2017, the Company announced that holders of 89.84% of the Notes (the "Consenting Noteholders") had locked up to tender their notes to and provide certain consents in relation to the Transaction, pursuant to the terms of a lock-up agreement between, amongst others, CTYML, the Company and the Consenting Noteholders (the "Lock-up Deed"). Pursuant to the Lock-up Deed, CTYML launched a tender offer and consent solicitation in respect of the Notes (the "Tender Offer and Consent Solicitation") the terms of which were set out in an offer to purchase and consent solicitation statement dated 4 April 2017 (the "Statement"). The Tender Offer and Consent Solicitation is open to acceptance by all holders of the Notes. In order to become effective, the holders of at least 90% of the aggregate principal amount of the Notes must tender into the Tender Offer and provide their consent to certain amendments to the terms of the Notes.
  • On 21 April 2017, the Company announced that CTYML was extending the expiration date set out in the Statement to 11:59pm (EST) on May 31, 2017 pending the approval of the Ghanaian government (the "Ghana Consent Condition").
  • On 8 May 2017, the Company announced that the Ghana Consent Condition had been satisfied and that CTYML was exercising its right to bring forward the Expiration Date of the Tender Offer and Consent Solicitation. CTYML gave notice that the Expiration Date should be brought forward to 11:59 pm EST on May 19, 2017 with the payment date expected to occur on or before May 24, 2017. It was further noted that in connection with the payment of interest on the Notes due on May 15, 2017 and in compliance with the terms of the Notes, the Company had elected to pay interest on the Notes for the May 2017 Interest Period entirely in cash at a rate equal to 8.000% per annum.
  • On 22 May 2017 the Company announced that the Tender Offer and Consent Solicitation launched by CTYML had successfully concluded with holders of 99.94% of the Notes having tendered their Notes and provided their consent to certain amendments to the terms of the Notes. On 25 May the Company announced that the Transaction had successfully closed with CTYML becoming the 100% legal and beneficial owner of the Company.

Key highlights  

  • Total tonnes of manganese ore production for Q1 2017 increased 109% compared to Q1 2016. Australian manganese ore production increased 74% and Ghanaian manganese ore production increased 117% compared to Q1 2016.
    Manganese C1 cash cost1 for Q1 2017 was $1.25/dmtu compared to $1.74/dmtu in Q1 2016, a decrease of 28%.
  • Total manganese sales tonnes increased 77% in Q1 2017 compared to Q1 2016. Australian manganese tonnes sold decreased 37% but Ghanaian manganese tonnes sold increased 97%.
  • Average manganese FOB sales price achieved increase 70% from $1.44 in Q1 2016 to $2.45 in Q1 2017.
  • The quarterly average price for manganese lump (CRU, 44%Mn CIF China) in Q1 2017 was $5.78/dmtu, an increase of 180% compared to $2.07/dmtu in Q1 2016 but was down 26% from $7.76/dmtu in Q4 2016..
  • Adjusted EBITDA[2] for Q1 2017 was a $18 million profit, an increase of $27 million from $9 million loss in Q1 2016. This increase is principally due to higher revenues as a result of higher pricing and increased volumes sold. Cash EBITDA for Q1 2017 was a profit of $18 million, increased from $11 million loss in Q1 2016.
  • The Group recorded a profit for the period of $5 million compared to a loss of $33 million in Q1 2016.
  • During the quarter the group had an operating cash inflow of $13 million compared to an outflow of $33 million in Q1 2016.
  • Cash and cash equivalents net of overdrafts increased in Q1 2017 by $3 million to $43 million on 31 March 2017.
  • Total capital expenditure for the group in Q1 2017 was $7 million, 393% higher than in Q1 2016. Total capital expenditure included payments for major components ordered and delivered in 2016 but settled in 2017.

Key Performance Indicators  


                                              Quarter ended
                                          31 March    31 March
    Unaudited                               2017        2016     % change
    Manganese ore produced (dry kt)        814.0       389.7      108.9%
    Manganese ore sales (dry kt)           868.9       490.2       77.3%
    Average C1 manganese unit cash cost
    ($/dmtu)[1]                             1.25        1.74      (28.2%)
    Average manganese FOB Sales price
    ($/dmtu)                                2.45        1.44       70.1%
    Revenue ($ million)                     59.2        21.4      176.6%
    Adjusted EBITDA ($ million)[2]          18.0        (8.9)    (302.2%)
    'Cash' EBITDA ($ million)[2]            17.6       (11.2)    (257.1%)
    Profit / (loss) for the period from
    continuing operations                    4.8       (33.2)    (114.5%)
                                             At          At
                                        31 March   31 December
                                            2017        2016     % change
    Cash and cash equivalents ($
    million)                                43.3        40.0        8.2%
    Gross debt ($ million)                (414.5)     (414.9)       0.1%
    Gross debt excluding high yield
    bonds ($ million)                       (6.0)       (7.1)      15.5%
    Net debt ($ million)                  (371.2)     (374.9)       1.0%

[1] Average C1 manganese unit cash cost represents the cash cost incurred at each processing stage from mining through to shiploading, divided by the total manganese dmtus produced. Included within the C1 manganese cash costs are an allocation of offsite, non-corporate and support services. Depreciation, government royalty payments, deferred stripping adjustments and stockpile movements are not included in the calculation.

[2] "Adjusted EBITDA" is defined as operating profit before depreciation and amortisation, impairment write-back/expense, net foreign exchange gain/loss and exceptional items[3]. 'Cash' EBITDA is defined as Adjusted EBITDA after removing the impact of the non-cash items of deferred stripping and net movement in inventories. Adjusted EBITDA and Cash EBITDA are the key profitability measures used across the business and reflect performance in a consistent manner and in line with how the business is managed and measured on a day to day basis. Adjusted EBITDA and Cash EBITDA are not uniformly or legally defined measures and are not recognised under IFRS or any other generally accepted accounting principles. Other companies in the mining industry may calculate these measures differently and consequently, our presentation of Adjusted EBITDA and Cash EBITDA items may not be readily comparable to other companies' figures.

[3] Exceptional items are material or non-recurring items excluded from management's assessment of profits because by their nature they could distort the Group's underlying quality of earnings. These are excluded to reflect performance in a consistent manner and in line with how the business is managed and measured on a day to day basis.

Commenting on the results, David Slater (CFO of Consmin) said:  

"The acquisition of Consmin by TMI represents the start of an exciting new chapter in the history of the Company. TMI and Consmin are jointly building a strong multinational conglomerate with the ability to develop and grow its production and processing capabilities. Management expect to continue operating Consmin in the interests of all stakeholders and look forward to implementing TMI's growth plans for the Company.  

During the quarter Consmin's operational performance improved with a 109% increase in Group production compared to the corresponding period in 2016.This was driven by a 117% increase in Ghanaian ore production following a ramp-up of output to meet the strong demand for this product. Australian ore production also increased by 74% compared with production in the first quarter of 2016 following the decision in November 2016 to process selective stockpiles of low grade ore which commenced in January 2017. Australian production in Q1 2016 was limited as a result of the Company's decision to suspend operations at the Woodie Woodie mine with effect from 2nd February 2016 and commence the transition into care and maintenance.  

The manganese C1 unit cash cost for the quarter was $1.25/dmtu, an improvement of 20% from $1.74/dmtu for Q1 2016.  

The company's manganese ore shipments totalled 869k dry tonnes during Q1 2017, an increase of 77% compared to Q1 2016. Sales of Ghanaian manganese ore rose 97% to 823k dry tonnes, a record for quarterly shipments from the Nsuta mine, compared to 418k dry tonnes in Q1 2016. During the quarter the Ghanaian customer base was reasonably well diversified, and included sales to our long-term customers TMI and Ukraine and also to buyers from the Chinese alloy and EMM/EMD sectors. Shipments of Australian manganese were only 46k dry tonnes in Q1 2017, a decrease of 37% compared to Q1 2016 with the Woodie Woodie mine remaining on care and maintenance with sales during the Q1 2017 being from the processing of lower grade stockpiles.  

The benchmark quarterly average price for manganese ore (CRU, 44%Mn CIF China) in Q1 2017 was $5.78/dmtu, an increase of 180% year on year from $2.07/dmtu in Q1 2016, but down 26% from an average of $7.76/dmtu in the previous quarter (Q4 2016). By the end of March, however, manganese prices for high grade ores fell to circa $4.00/dmtu but rose again in April and May as traders in China decided to hold back port stockpile sales.  

Although much improved from Q1 2016, the manganese ore market still remains fragile as China's ore imports have averaged 2.0 million tonnes per month in the first quarter and port stocks have remained at over 3.0 million tonnes. Manganese ore supply has been abundant and should demand for ore begin to soften, ore prices are likely to come under renewed downward pressure, unless new shipments from global suppliers are cut significantly and port stocks are reduced. As a result of these uncertain factors, volatility in manganese ore pricing is expected to persist throughout the remainder of 2017, with much depending on the performance of China's steel industry and supplier response to any negative changes in the Chinese steel market.  

The Company ended 2016 with net cash and cash equivalents of $40 million and has maintained liquidity at similar levels during Q1 2017 with net cash and cash equivalents having increased to $43 million at 31 March 2017.  

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: Pilbara Manganese 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.

Conference Call  

There will be a conference call for analysts and bondholders, the details of which will be released on the Company website http://www.consmin.com.

Market, Economic and Industry Data  

Market, economic and industry data used throughout this report has been derived from various industry and other independent sources. Industry publications, surveys and forecasts generally state that the information contained therein has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed and such industry forecasts may not have been updated. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and uncertainties as the other forward looking statements contained in this report.

Forward looking statements  

This report includes "forward-looking statements" that express or imply expectations of future events or results. Forward-looking statements are statements that are not historical facts. These statements include, without limitation, financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future production, operations, costs, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words 'plans,' 'expects,' 'anticipates,' 'believes,' 'intends,' 'estimates' and other similar expressions.

All forward-looking statements involve a number of risks, uncertainties and other factors. Although Consmin's management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Consmin, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements contained in this report. Factors that could cause or contribute to differences between the actual results, performance and achievements of Consmin include, but are not limited to, political, economic and business conditions, industry trends, competition, commodity prices, changes in regulation, currency fluctuations (including the Australian dollar and US dollar exchange rates), Consmin's ability to recover its reserves or develop new reserves, including its ability to convert its resources into reserves and its mineral potential into resources or reserves, and to process its mineral reserves successfully and on a timely basis. Consmin is also exposed to the risk of trespass, theft and vandalism, changes in its business strategy, as well as risks and hazards associated with the business of mineral exploration, development, mining and production. Accordingly, investors should not place reliance on forward looking statements contained in this report.

The forward-looking statements in this report reflect information available at the time of preparing this report. Subject to the requirements of the applicable law, Consmin explicitly disclaims any obligation or undertaking publicly to release the result of any revisions to any forward-looking statements in this report that may occur due to any change in Consmin's expectations or to reflect events or circumstances after the date of this report. No statements made in this report regarding expectations of future profits are profit forecasts or estimates, and no statements made in this report should be interpreted to mean that Consmin's profits for any future period will necessarily match or exceed the historical published profits of Consmin or any other level.

Marketing Review  

Global steel production in Q1 2017 rose by 5.6% compared to the same quarter of the prior year to 414 million tonnes and by 1.4% compared to Q4 2016. China accounted for 49% of global production in Q1 2017, with its production rising by 4.4% compared to the same quarter of the prior year to 201 million tonnes but its output was down 0.6% from the previous quarter (Q4 2016). As a result of rising steel production imports of manganese ore to China rose by 96% compared to the same quarter of the prior year to 5.9 million tonnes in the quarter (23.5 million tonnes annualised), and grew by 25% from the previous quarter (Q4 2016). It is important to note that imports during the comparative period of Q1 2016 were substantially lower than normal quarterly average imports exaggerating the quarterly growth compared to the prior year (2.99 million tonnes in Q1 2016 vs. quarterly average for full year 2016 of 4.26 million tonnes), due to major global cutbacks implemented in early 2016 by major miners. However, imports were still up substantially compared to normal levels of imports into China, leading to a port stocks rise from 2.2 million at the start of 2017 to over 3.5 million tonnes by the end of March 2017.

The company's manganese ore shipments totalled 869k dry tonnes during Q1 2017, an increase of 77% compared to Q1 2016 where 490k dry tonnes were shipped. Shipments of Australian manganese were only 46k dry tonnes in Q1, a decrease of 37% compared to Q1 2016, as the Woodie Woodie mine remained on care and maintenance with sales during the quarter only from lower grade stockpiles. Sales from Ghana rose 97% to 823k dry tonnes, a record high quarterly shipments from the Nsuta mine, compared to 418k dry tonnes in Q1 2016. The Ghanaian customer base was reasonably well diversified during the quarter, including sales to our long-term customers TMI and Ukraine and also to buyers from the Chinese alloy and EMM/EMD sectors.

The benchmark quarterly average price for manganese lump (CRU, 44%Mn CIF China) in Q1 2017 was $5.78/dmtu, an increase of 180% compared to the same quarter of the prior year from $2.07/dmtu in Q1 2016 but was down 26% from $7.76/dmtu in the previous quarter (Q4 2016). By the end of March however manganese prices for high grade ores fell to circa $4.00/dmtu but rose again in April and May as traders and financing companies, who bought manganese ore at the higher prices between December 2016 and February 2017, decided to hold back port stockpile sales in order to avoid significant losses. Stocks at China ports have risen substantially as a result of trader holdouts.

Although very much improved from a year earlier, the manganese ore market still remains fragile as China's ore imports have averaged 2.0 million tonnes per month in the first quarter and port stocks have remained at over 3.0 million tonnes. Manganese ore supply has been abundant and should demand for ore begin to soften, ore prices are likely to come under renewed downward pressure, unless new shipments from global suppliers are cut significantly and port stocks are reduced. As a result of these uncertain factors, volatility in manganese ore pricing is likely to persist throughout 2017, with much depending on the performance of China's steel industry and supplier response to any negative changes in the Chinese steel market.

Operational Review  


                                             Quarter ended
                                        31 March     31 March
    Summary Overview (Unaudited)          2017         2016        % change
    Total mined (mBCM)                     2.4          1.9          26.3%
    Manganese ore produced (dry kt)      814.0        389.7         108.9%
    Australia                            130.9         75.3          73.8%
    Ghana                                683.1        314.4         117.3%
    Manganese ore produced (mdmtu)        23.2         11.9          95.0%
    Australia                              4.3          3.0          43.3%
    Ghana                                 18.9          8.9         112.4%
    Manganese ore sales (dry kt)         868.9        490.2          77.3%
    Australia                             45.5         72.4         (37.2%)
    Ghana                                823.4        417.8          97.1%
    Manganese ore sales (mdmtu)           24.4         14.9          63.8%
    Australia                              1.6          3.3         (51.5%)
    Ghana                                 22.8         11.6          96.6%
    Total capex - including exploration
    ($ million)                            6.9          1.4         392.9%
    Average unit cash cost ($/dmtu)       1.25         1.74          28.2%

Australia: Woodie Woodie  

Care and maintenance  

Following the decision taken in January 2016 to place the mine on care and maintenance, mining operations ceased in early February 2016 with the mine being safely transitioned into care and maintenance during Q1 2016. The mine has remained on care and maintenance with no mining activity since then.

Production and sales  

Although no mining has taken place since February 2016, in November 2016 a decision was made to process selective stockpiles of low grade ore, which commenced in January 2017. Production in Q1 2017 totalled 131k tonnes of manganese ore (4.3 million dmtu). The sales in Q1 2017 sales totalled 46k tonnes of manganese ore (1.6 million dmtu).

Capital expenditure  

No capital projects were conducted in Q1 2017.

Exploration  

A modest 1.2km tenement maintenance drilling program has been planned for 2017 and is scheduled to commence in April 2017. No drilling or other ground activities took place in Q1 2017.

Ghana: Ghana Manganese Company Limited ('GMC')  

Safety  

As indicated in our 2016 annual operational review, GMC regrettably suffered a fatality involving one of our employees, who was performing scheduled maintenance work on an 11kV electricity transmission line at the mine in February 2017. Local regulating authorities have concluded the incident investigations and disciplinary sanctions have been issued to all those involved or in a position of responsibility. Further, the Company has been issued and has settled a fine of US$10,000 to the Inspectorate Division of the Minerals Division. We have reiterated to staff and stakeholders that any loss of life at our operations is unacceptable. We will continue to work relentlessly to build and improve the health and safety standards of our organisation.

Production and sales  

Production at GMC totalled 683k tonnes of manganese ore (18.9 million dmtu) during the first quarter of 2017, representing a 117% increase in tonnes (112% increase in dmtu) compared to the same quarter in 2016. In Q1 2017 GMC sold 823k tonnes of manganese ore (22.8 million dmtu) representing a 97% increase in both tonnes and dmtus compared to the first quarter of 2016.

Capital Expenditure  

The capital expenditure in Q1 2017 was $5.9 million, with the vast majority spent on main components ordered and delivered in 2016 but paid for in 2017 $0.7 million spent on light vehicles and a wheel loader with a further $0.2 million spent on civil projects.

In the first quarter of 2016 a total of $0.4 million was spent on capital expenditure projects, all of which was spent on critical spares and components for the mobile and fixed equipment.

Exploration  

There were no exploration expenditure during Q1 2017. During the first quarter of 2016 we spent $0.5 million on infill drilling focused on the continued resource development of our main Pit C.

Projects  

Port Development Project:  

Following earlier reported managerial changes at Ghana Ports and Harbour Authority (GPHA), GMC is still awaiting an official update on the tender selection process in respect of the Takoradi bulk terminal operator. A formal update should be received during Q2 2017. During Q1 2017 there was no significant infra-structural work at the Takoradi port. It is therefore expected that these delays could potentially impact the timing of the final commissioning of the Takoradi port project (previously scheduled by early 2019).

Pit C-North Development:  

Good progress has been made with the earthwork development phase of the resettlement programme. GMC has reached the final stage of selecting the building contractors. In total $1.1 million has been spent on the Pit C North resettlement project in Q1 2017 (budget was $2.2 million).The GMC technical team had another follow-up meeting with GRIDCO (a public utility provider) in March 2017. Parties have investigated options to divert and re-route the powerline on GMC's concession to accommodate the concerns expressed by GMC. A survey on the alternative line is expected to take place in May 2017.

Hotopo Exploration Project:  

Following the presentation of the first 2016 drilling results, which clearly showed the complexity of the Mn geological area explored, GMC has drafted the next phase exploration proposal for Hotopo Resources Limited (HRL). It is planned to undertake this program after the rainy season in 2017.

Other  

Mindy Mindy  

Consmin has a significant interest in the Mindy Mindy iron ore tenements through its 50% shareholding in Pilbara Iron Ore Pty Ltd ('PIO'). PIO's claim that it has earned an 80% ownership interest in one of the tenements is subject to court determination. A decision adverse to PIO was handed down in the Warden's Court on 16 September 2014. PIO lodged an appeal in the Supreme Court of Western Australia against the Warden's decision. The hearing of that appeal concluded on 31 March 2016, with the Judge reserving his decision. A decision is expected to be handed down in Q2 of 2017.

OM Holdings Limited ('OM Holdings')  

OM Holdings is, primarily, a vertically integrated manganese mining, processing and marketing company listed on the ASX (ticker: OMH). At 31 March 2017, the Company's holding in OM Holdings remained at 8.0%, consistent with 31 December 2016. During the quarter the market value of the Company's holding in OM Holdings decreased by $1.9 million to $4.9 million as at 31 March 2017.

People  

The operational management decisions of the Group are made by the Group Executive Committee ('GEC'). The GEC members are Mark Camaj (General Manager: Marketing), Jurgen Eijgendaal (Managing Director: Ghana), Oleg Sheyko (CEO of Metals Solutions) and David Slater (Executive Director and Chief Financial Officer).

Financial Review  

Unaudited Condensed Consolidated Statement of Comprehensive Income  


                                                          Quarter ended
    $m                                           31 March 2017    31 March 2016
    Revenue                                           59.2            21.4
    Cost of sales                                    (24.6)          (29.4)
    Gross profit / (loss)                             34.6            (8.0)
    Selling and distribution costs                   (11.2)           (5.6)
    General and administrative costs                  (9.9)           (9.1)
    Other operating income - net                       0.3             0.4
    Impairment expense                                   -            (2.4)
    Net foreign exchange gain                          4.6             0.6
    Operating profit / (loss)                         18.4           (24.1)
    Presented as:
    Adjusted EBITDA                                   18.0            (8.9)
    Depreciation and amortisation                     (4.2)           (2.9)
    Impairment expense                                   -            (2.4)
    Restructuring costs                                  -           (10.5)
    Net foreign exchange gain / (loss)                 4.6             0.6
    Operating profit / (loss)                         18.4           (24.1)
    Net financing costs                              (11.5)           (8.8)
    Profit / (loss) before tax                         6.9           (32.9)
    Income tax charge                                 (2.1)           (0.3)
    Profit / (loss) for the period                     4.8           (33.2)

Revenue  

The consolidated revenue for the Group increased by 177% from $21 million in Q1 2016 to $59 million in Q1 2017 as a result of the combination of both higher volumes sold and higher pricing. Manganese volumes sold (in tonnes) increased by 77% in Q1 2017 and volumes sold in dmtus increased by 64% (due to the majority of sales being of the relatively lower grade manganese ore). Sales tonnes from Ghana were 97% higher than in Q1 2016 and sales tonnes from Australia were 37% lower than Q1 2016.

The average price of our manganese ore sold increased by 70% from $1.44/dmtu FOB in Q1 2016 to $2.45/dmtu FOB in Q1 2017 due to improved ore pricing in the first quarter of the year.

The graph below summarises the increase in revenue compared to Q1 2017:

Cost of Sales  

The cost of sales for the Group decreased by 16% from $29 million in Q1 2016 to $25 million in Q1 2017. An analysis of the cost of sales is as follows:


                                                     Quarter ended
    $m                                 31 March 2017 31 March 2016  Movement
    Mining and production expenses     17.9          27.1           (33.9%)
    Depreciation and amortisation       4.2           2.9            44.8%
    Royalties and other taxes           2.5           1.7            47.1%
    Deferred stripping                 (0.2)         (0.4)           50.0%
    Net movement in inventories        (0.2)         (1.9)           89.5%
    Other                               0.4             -           100.0%
    Total cost of sales                24.6          29.4           (16.3%)

The principal factors driving this $5 million reduction are as follows:

  • A $9 million benefit from reduced mining and production costs following the decision to place the Australian operations into care and maintenance with effect from 2 February 2016. Q1 2016 included $11 million of redundancy cost following this transition.


offset by:

  • A $2 million adverse change in net movement in inventories;
  • A $1 million increased cost of depreciation and amortisation as a result of higher production volumes;
  • A $1 million increase of royalties payments as a result of higher revenues.

The Company uses the 'C1 cash cost' as a measure of average unit cost. The C1 unit cash cost represents the cash cost incurred at each processing stage from mining through to ship loading, divided by the total manganese dmtu produced. The average C1 unit cost of manganese production, on a "fully expensed" mining cost basis, was $1.25 for Q1 2017, a decrease of 28% from $1.74/dmtu for Q1 2016. The Group C1 cash unit cost for Q1 2017 relates only to C1 unit costs from Ghana whereas Q1 2016 includes Australian C1 cash unit costs for the period up to 2nd February 2016 when the mine was placed on care and maintenance.


Gross Profit / Loss  

Gross profit for the Group was $35 million in Q1 2017, an increase of $43 million from $8 million gross loss in Q1 2016. The gross margin in Q1 2017 was 58% compared to a minus 37% gross profit margin in Q1 2016. The increase in both gross profit and gross profit margin has been driven by higher manganese ore prices, higher sales volumes and reduced mining costs.

Adjusted EBITDA and Cash EBITDA  

Adjusted EBITDA and Cash EBITDA are calculated as follows:


                                                   Quarter ended
    $m                                     31 March 2017  31 March 2016
    Operating profit / (loss)                  18.4          (24.1)
    Depreciation and amortisation               4.2            2.9
    Impairment of available for sale financial
    assets                                        -            2.4
    Restructuring costs                           -           10.5
    Net foreign exchange gain                  (4.6)          (0.6)
    Adjusted EBITDA                            18.0           (8.9)
    Deferred stripping                         (0.2)          (0.4)
    Net movement in inventories                (0.2)          (1.9)
    'Cash' EBITDA                              17.6          (11.2)

Adjusted EBITDA is defined as operating profit before depreciation and amortisation, impairment expense, net foreign exchange gain or loss and exceptional items. Cash EBITDA is defined as Adjusted EBITDA after removing the impact of the non-cash items of deferred stripping and net movement in inventories. Adjusted EBITDA and Cash EBITDA are the key profitability measures used across the whole business and reflect the performance in a consistent manner and in line with how the business is managed and measured on a day to day basis.

Adjusted EBITDA for Q1 2017 was a profit of $18 million, an increase of $27 million from a loss of $9 million in Q1 2016, as a result of the following key movements:

  • An increase in revenues of $38 million due to higher pricing and volumes sold;

offset by:


  • An increase in mining and production expenses (excluding restructuring costs) by $1 million
  • A $6 million increase in selling and distribution costs reflecting increased volumes hauled and shipped;
  • An increase in royalties of $1 million due to higher revenues;
  • A $2 million adverse change in the net movement in inventories;

Cash EBITDA has increased by $29 million from $11 million loss in Q1 2016 to a profit of $18 million in Q1 2017 due to the reasons outlined for adjusted EBITDA above net of adverse change in the net movement in inventories of $2 million.

Other Key Items  

Selling and distribution expenses increased from $6 million in Q1 2016 to $11 million in Q1 2017. This is a result of the 97% increase in volumes shipped from Ghana in the quarter compared to Q1 2016, partially offset by decreased volumes shipped from Australia. General and administrative expenses for Q1 2017 were slightly higher than in Q1 2016.

The Group is subject to taxation in the jurisdictions in which it operates; primarily Australia and Ghana. The parent company is domiciled in Jersey and is subject to a corporate tax rate of 0%. The Group recognised an income tax charge of $2.1 million in Q1 2017 compared to a charge of $0.3 million in Q1 2016.

Net financing costs for the quarter are $12 million which was $3 million higher than in Q1 2016. This resulted from the combination of an increase in the overall interest rate on the Senior Secured Notes and increase in the principle outstanding resulting from the PIK element of previous interest costs.

Loss / profit for the Period  

The Group has recognised a profit for Q1 2017 of $5 million compared to a loss of $33 million in Q1 2016.

Unaudited Condensed Consolidated Statement of Financial Position  


                                              As at
    $m                            31 March 2017   31 December 2016
    Cash and cash equivalents          43.3             40.0
    Other current assets               72.5             61.2
    Non-current assets                209.4            211.3
    Total assets                      325.2            312.5
    Current borrowings                 (3.7)            (3.6)
    Non-current borrowings           (410.8)          (411.3)
    Other current liabilities         (59.2)           (45.0)
    Other non-current
    liabilities                       (84.7)           (83.7)
    Total liabilities                (558.4)          (543.6)
    Net (liabilities) / assets       (233.2)          (231.1)

Cash and Cash Equivalents  

Cash and cash equivalents at 31 March 2017 were $43 million, an increase of $3 million from $40 million at 31 December 2016.

Borrowings  

Current borrowings at 31 December 2017 are in line with the amounts due at 31 December 2016.

Guarantor Group  

During the three months ended 31 March 2017, the Guarantors of the senior secured notes represented 100% (31 March 2016: 100%) of our consolidated revenues and 42% (31 March 2016: 140%) of our consolidated EBITDA. As of 31 March 2017, the Guarantors represented 64% of our consolidated total assets (31 March 2016: 28%). As of 31 March 2017, the non-guarantor subsidiaries have $Nil indebtedness outstanding (31 March 2016: $2 million). The unrestricted subsidiaries are not significant subsidiaries and therefore not material to the Group. As a result, separate financial details have not been disclosed.

Unaudited Condensed Consolidated Statement of Cash Flows  


                                                                     Quarter ended
    $m                                                       31 March 2017  31 March 2016
    Cash inflow / (outflow) from operating activities            12.6           (33.2)
    Cash outflow from investing activities                       (6.9)           (1.3)
    Cash outflow from financing activities                       (0.9)           (1.8)
    Net increase / (decrease) in cash and cash equivalents        4.8           (36.3)
    Cash and cash equivalents at the beginning of the period     40.0            75.9
    Exchange losses on cash and cash equivalents                 (1.5)           (0.5)
    Cash and cash equivalents at the end of the period           43.3            39.1

Cash Flows and Liquidity  

Net cash inflow from operating activities amounted to $13 million in Q1 2017 compared to outflow of $33 million in Q1 2016, an increase of $46 million. This increase in operating cash flow was a result of increase revenue from higher pricing for manganese and increased volumes sold from the Ghanaian operations.

The net cash outflow from investing activities was $7 million in Q1 2017 compared to a cash outflow of $1 million in Q1 2016, an increase of $6 million due to higher payments for capital expenditure in the current period.

The net cash outflow from financing activities was $1 million in Q1 2017 compared to a net cash outflow of $2 million in Q1 2016 and in both periods relates to repayment of hire purchase borrowings.

As a result total cash and cash equivalents net of overdrafts increased to $43 million at 31 March 2017 from $40 million at 31

Consolidated Minerals Limited
Unaudited Condensed Consolidated Financial Statements
For the Three Months Ended 31 March 2017  

Unaudited consolidated statement of comprehensive income for three months ended 31 March 2017  


                                                                 Three months ended
                                                                      31 March
    $m                                                  Note       2017       2016
    Revenue                                              6         59.2       21.4
    Cost of sales                                        7        (24.6)     (29.4)
    Gross profit / (loss)                                          34.6       (8.0)
    Selling and distribution
    costs                                                         (11.2)      (5.6)
    General and
    administrative costs                                           (9.9)      (9.1)
    Other operating income -
    net                                                             0.3        0.4
    Impairment expense                                              -         (2.4)
    Net foreign exchange gain                                       4.6        0.6
    Operating profit / (loss)                                      18.4      (24.1)
    Presented as:
    Adjusted EBITDA                                                18.0       (8.9)
    Depreciation and
    amortisation                                                   (4.2)      (2.9)
    Impairment of
    available-for-sale
    financial assets                                                -         (2.4)
    Restructuring costs                                             -        (10.5)
    Net foreign exchange gain                                       4.6        0.6
    Operating profit / (loss)                                      18.4      (24.1)
    Finance income                                                  -          0.1
    Financing costs                                               (11.5)      (8.9)
    Net financing costs                                           (11.5)      (8.8)
    Profit / (loss) before tax                                      6.9      (32.9)
    Income tax charge                                              (2.1)      (0.3)
    Profit / (loss) for the period                                  4.8      (33.2)
    Other comprehensive income / (expense)
    Items that may be subsequently reclassified to
    profit or loss:
    Revaluation of available-for-sale financial
    assets                                                         (2.2)       0.2
    Net foreign currency
    translation differences                                        (4.7)      (0.2)
    Income tax charge on
    other comprehensive
    income                                                          -         (0.1)
    Other comprehensive expense for the period, net of tax         (6.9)      (0.1)
    Total comprehensive expense for the
    period                                                         (2.1)     (33.3)
    Profit / (loss)
    attributable to:
    Owners of the parent
    company                                                         4.2      (33.3)
    Non-controlling interest                                        0.6        0.1
    Profit / (loss) for the
    period                                                          4.8      (33.2)
    Total comprehensive expense attributable to:
    Owners of the parent
    company                                                        (2.7)     (33.4)
    Non-controlling interest                                        0.6        0.1
    Total comprehensive expense for the period                     (2.1)     (33.3)

The notes on pages 17 to 21 are an integral part of this unaudited Consolidated Interim Financial Information.

Unaudited consolidated statement of financial position  


                                                                            As at
                                                                                    31
                                                                     31 March  December
    $m                                                       Note       2017      2016
    Non-current assets
    Property, plant and
    equipment                                                          167.1     167.3
    Intangible assets                                                    7.0       6.9
    Goodwill                                                            28.9      28.9
    Available-for-sale
    financial assets                                                     4.9       6.8
    Investment in associate                                              1.4       1.3
    Trade and other receivable                                           0.1       0.1
                                                                       209.4     211.3
    Current assets
    Inventories                                                         26.3      24.8
    Trade and other receivables                                         46.2      36.4
    Cash and cash equivalents                                 8         43.3      40.0
                                                                       115.8     101.2
    Current liabilities
    Borrowings                                                9         (3.7)     (3.6)
    Trade and other payables                                           (50.9)    (35.7)
    Provisions                                                          (8.3)     (9.3)
                                                                       (62.9)    (48.6)
    Net current assets                                                  52.9      52.6
    Non-current liabilities
    Borrowings                                                9       (410.8)   (411.3)
    Provisions                                                         (53.7)    (52.1)
    Deferred tax liabilities                                           (31.0)    (31.6)
                                                                      (495.5)   (495.0)
    Net liabilities                                                   (233.2)   (231.1)
    Attributable to the equity shareholders of the
    parent company
    Share capital                                                       10.0      10.0
    Share premium                                                      194.7     194.7
    Subordinated shareholder
    loans treated as equity                                            737.5     737.5
    Reserves                                                           (17.4)    (10.5)
    Accumulated losses                                              (1,171.9) (1,176.1)
    Total equity attributable to equity holders of the
    parent company                                                    (247.1)   (244.4)
    Non-controlling interests                                           13.9      13.3
    Total equity                                                      (233.2)   (231.1)

The notes on pages 17 to 21 are an integral part of this unaudited Consolidated Interim Financial Information.

Unaudited consolidated statement of changes in equity


                      Attributable to equity owners of the parent
                                                          Company
                                                                               Non-
                                                                        controlling
                Share   Share                                             interests
              capital premium Shareholder             Accumulated                      Total
    $m                             equity   Reserves       losses   Total             equity
    Balance at
    1 January
    2017        10.0   194.7       737.5      (10.5)    (1,176.1)  (244.4)     13.3   (231.1)
    Profit for
    the period     -      -            -          -          4.2      4.2       0.6      4.8
    Revaluation
    of
    available-
    for-sale
    financial
    assets         -      -            -       (2.2)           -     (2.2)        -     (2.2)
    Foreign
    currency
    translation
    differences    -      -            -       (4.7)           -     (4.7)        -     (4.7)
    Income tax
    on other
    comprehensive
    income         -      -            -          -            -        -         -        -
    Balance at
    31 March
    2017        10.0  194.7        737.5      (17.4)    (1,171.9)  (247.1)     13.9   (233.2)




                      Attributable to equity owners of the parent
                                       Company
                                                                                Non-
                                                                         controlling
                  Share   Share                                            interests
                capital premium  Shareholder             Accumulated                   Total
    $m                                equity    Reserves      losses   Total          equity
    Balance at
    1 January
    2016          10.0   194.7        737.5        (13.3)   (1,098.8) (169.9)   12.8 (157.1)
    Loss for
    the period      -        -            -            -       (33.3)  (33.3)    0.1  (33.2)
    Revaluation
    of
    available-
    for-sale
    financial 
    assets          -        -            -          0.2           -     0.2       -    0.2
    Foreign
    currency
    translation
    differences     -        -            -         (0.2)          -    (0.2)      -   (0.2)
    Income tax
    on other
    comprehensive
    income          -        -            -         (0.1)          -    (0.1)      -   (0.1)
    Balance at
    31 March
    2016         10.0    194.7        737.5        (13.4)   (1,132.1) (203.3)   12.9 (190.4)


The notes on pages 17 to 21 are an integral part of this unaudited Consolidated Interim Financial Information.

Unaudited condensed consolidated statement of cash flows for the three months ended 31 March 2017  


                                                                           Three months
                                                                          ended 31 March
    $m                                            Note                    2017     2016
    Cash flow from
    operating activities
    Profit / (loss) before tax                                            6.9     (32.9)
    Adjustments to add / (deduct) non-cash
    items:
    Depreciation and amortisation                                         4.2       2.9
    Impairment of available-for-sale financial
    assets                                                                  -       2.4
    Deferred stripping                                                   (0.2)     (0.4)
    Net foreign exchange gain                                            (4.6)     (0.6)
    Net financing costs                                                  11.5       8.8
    Working capital adjustments:
    (Increase) / decrease in inventories                                 (1.4)      2.6
    Increase in receivables                                              (9.7)     (3.3)
    Increase / (decrease) in payables                                     6.3     (12.7)
    Net movement in working capital                                      (4.8)    (13.4)
    Income taxes paid                                                    (0.4)        -
    Net cash inflow / (outflow) generated from
    operating activities                                                 12.6     (33.2)
    Cash flow from
    investing activities
    Payments for mineral exploration and
    evaluation expenditure                                                  -      (0.3)
    Purchase of property,
    plant and equipment                                                  (6.9)     (1.1)
    Interest received                                                       -       0.1
    Net cash outflow from
    investing activities                                                 (6.9)     (1.3)
    Cash flow from
    financing activities
    Interest paid                                                        (0.1)     (0.2)
    Repayment of hire
    purchase borrowings                                                  (0.8)     (1.6)
    Net cash outflow from financing activities                           (0.9)     (1.8)
    Net increase / (decrease) in cash and cash equivalents                4.8     (36.3)
    Cash and cash equivalents at the beginning of the period         8   40.0      75.9
    Exchange losses on cash and cash equivalents                         (1.5)     (0.5)
    Cash and cash equivalents at the
    end of the period                                                8   43.3      39.1

>

The notes on pages 17 to 21 are an integral part of this unaudited Consolidated Interim Financial Information.

Notes to the unaudited consolidated financial statements  

1. General information  

Consolidated Minerals Limited (formerly Palmary Enterprises Limited) ('the Company') was incorporated in Belize in 2004 and redomiciled to Jersey in 2008. The address of its registered office is Commercial House, 3 Commercial Street, St Helier, Jersey JE2 3RU.

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 ore. The Group's operations are primarily conducted through four major operating/trading subsidiaries: Pilbara Manganese Pty Limited (Australia), Ghana Manganese Company Limited, Manganese Trading Limited (Jersey) and Pilbara Trading Limited (Jersey).

2. Basis of preparation of interim report  

This condensed consolidated interim financial information for the three months ended 31 March 2017 has been prepared in accordance with IAS 34 "Interim financial reporting". The condensed consolidated interim financial information should be read in conjunction with the annual financial information for the year ended 31 December 2016, which have been prepared in accordance with IFRS.

The financial information set out above does not constitute the Company's statutory accounts for the year ended 31 December 2016 but comparative information is derived from those accounts. Statutory accounts for 2016 have been filed with the Jersey registrar of companies and the auditors have issued an unqualified audit opinion on these accounts.

(a) New and amended standards mandatory for the first time for the financial year beginning 1 January 2017 relevant to the Group  

IFRS 15 Revenue from Contracts with Customers: In May 2014, the IASB issued IFRS 15 Revenue from Contracts with Customers, which covers principles that an entity shall apply to report useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from a contract with a customer. Application of the standard is mandatory for annual reporting periods beginning on or after 1 January 2017 with earlier application permitted. We are currently assessing the impact of adopting IFRS 9 on our consolidated financial statements.

There are no other new or amended accounting standards mandatory for the first time for the financial year beginning 1 January 2017, or new standards and revisions to existing standards that are not yet effective and have not been early adopted that are relevant to the Group other than those disclosed in the Company's statutory accounts for the year ended 31 December 2016.

(b) Comparatives  

Comparatives have been prepared on the same basis as current period figures.

(c) Changes in accounting policies  

There have been no material changes in accounting policies since the presentation of the annual report for the year ended 31 December 2016 and all accounting policies have been consistently applied in the preparation of these interim financial statements.

(d) Foreign currency translation  

The following foreign exchange rate against the USD has been used in the preparation of the consolidated financial statements:


                             Average 3                              Average 3
                             months to                              months to
                  31 March    31 March   31 December   31 March    March 2016
                      2017        2017         2016        2016 
       Australian
       dollar       0.7644      0.7574       0.7197      0.7668        0.7500

3. Critical accounting judgments and key sources of estimation uncertainty  

There have been no material changes in critical accounting judgements since the presentation of the annual report for the year ended 31 December 2016.

4. Going Concern  

The group financial statements for the year ended 31 December 2016 have been prepared on a going concern basis. Analysis of the cash flows during the first quarter of 2017 supports assumption of the group operating on a going concern basis.

5. Segment analysis  

Management considers the business from a product perspective and has determined the operating segments based on the reports reviewed by the Group Executive Committee, who are the Chief Operating Decision Makers. The primary products of the Group are processed manganese ores. The "Other" segment consists of iron ore projects and administration and head office functions.

The segment information provided for the three month periods ended 31 March 2017 and 31 March 2016 is as follows:


    31 March 2017
    $m                                       Manganese  Other     Total
    Revenue from external customers           59.2         -       59.2
    Cost of goods sold                       (24.6)        -      (24.6)
    Gross profit                              34.6         -       34.6
    Adjusted EBITDA                           23.0      (5.0)      18.0
    Depreciation                              (4.2)        -       (4.2)
    Net foreign exchange gain                  3.6       1.0        4.6
    Financing costs                           (0.5)    (11.0)     (11.5)
    Profit / (loss) before tax                21.9     (15.0)       6.9
    Income tax charge*                                             (2.1)
    Profit for the period                                           4.8
    Total assets                             311.0      14.2      325.2
    Total liabilities                       (106.3)   (452.1)    (558.4)

    31 March 2016
    $m                                             Manganese  Other     Total
    Revenue from external customers                 21.4         -       21.4
    Cost of goods sold                             (29.4)        -      (29.4)
    Gross loss                                      (8.0)        -       (8.0)
    Adjusted EBITDA                                 (5.2)     (3.7)      (8.9)
    Depreciation                                    (2.9)        -       (2.9)
    Impairment of available-for-sale financial
    assets                                             -      (2.4)      (2.4)
    Restructuring costs                            (10.3)     (0.2)     (10.5)
    Net foreign exchange gain                        3.4      (2.8)       0.6
    Finance income                                     -       0.1        0.1
    Financing costs                                 (0.5)     (8.4)      (8.9)
    Loss before tax                                (15.5)    (17.4)     (32.9)
    Income tax charge*                                                   (0.3)
    Loss for the period                                                 (33.2)
    Total assets                                   288.7      30.2      318.9
    Total liabilities                             (91.0)    (418.4)    (509.4)

* Income tax is not allocated to segments as tax is managed on a group basis.

A reconciliation of adjusted EBITDA to loss before tax is provided as follows:


                                                                   Three months ended 31
                                                                           March
    $m                                                               2017        2016
    Adjusted EBITDA                                                  18.0        (8.9)
    Depreciation                                                     (4.2)       (2.9)
    Impairment expense                                                  -        (2.4)
    Restructuring costs                                                 -       (10.5)
    Net foreign exchange gain /
    (loss)                                                            4.6         0.6
    Net financing costs                                             (11.5)       (8.8)
    Profit / (loss) before tax                                        6.9       (32.9)

Adjusted EBITDA is defined as operating profit before depreciation and amortisation, impairment write-back/expense, net foreign exchange gain/loss and exceptional items.

The information provided to management with respect to total assets is measured in a manner consistent with that of the financial statements. These assets are allocated based on the operations of the segment.

6.  Revenue  

Revenue from the sale of ore by geographic destination was as follows:


                                                                  Three months ended 31
                                                                          March
    $m                                                               2017         2016
    China                                                            43.0         14.4
    Ukraine*                                                         13.8          5.2
    Australia                                                           -          1.8
    Vietnam                                                           2.4            -
    Total revenue by geographic destination                          59.2         21.4

*Sales to related parties

7.  Cost of sales  


                                                                     Three months ended
                                                                          31 March
    $m                                                                 2017       2016
    Mining and production expenses                                    17.9        27.1
    Depreciation and amortisation                                      4.2         2.9
    Royalties and other taxes                                          2.5         1.7
    Deferred stripping                                                (0.2)       (0.4)
    Net movement in inventories                                       (0.2)       (1.9)
    Other                                                              0.4           -
    Total cost of sales                                               24.6        29.4

8.  Cash and cash equivalents  


                                                                      As at      As at
                                                                                   31
                                                                    31 March    December
    $m                                                                2017        2016
    Cash at bank and in hand                                          43.3        40.0
    Short-term bank deposits                                             -           -
    Cash and cash equivalents at the end of the year                  43.3        40.0
    Less: bank overdrafts (see note 9)                                   -           -
    Net cash and cash equivalents per the cash flow statement         43.3        40.0

9.  Borrowings    


                                                                   As at        As at
                                                                 31 March    31 December
    $m                                                             2017         2016
    Non-current
    Senior secured high yield notes                                 408.5       407.8
    Finance lease liabilities - hire purchase loans                   2.3         3.5
                                                                    410.8       411.3
    Current
    Finance lease liabilities - hire purchase loans                   3.7         3.6
                                                                      3.7         3.6
    Total borrowings                                                414.5       414.9

The senior secured high yield notes are stated net of unamortised restructuring costs of $8.0 million.

Finance lease liabilities are secured by charges over each respective leased asset.  

The carrying value of borrowings approximates their fair value.

The exposure of the Group's borrowings to interest rate changes and the contractual re-pricing dates at the statement of financial position date:


                                                                       As at      As at
                                                                      31 March  31 December
    $m                                                                  2017      2016
    Repayable on demand                                                   -          -
    6 months or less                                                      -          -
    6 - 12 months                                                         -          -
    1 - 5 years                                                           -          -
    Over 5 years                                                          -          -
                                                                          -          -
    Borrowings not exposed to changes in interest rates               414.5      414.9
                                                                      414.5      414.9

10. Contingent liabilities and contingent assets    

There has been no change in circumstances relating to contingent liabilities already disclosed in the 31 December 2016 financial information other than those mentioned below:

Group entities have pledged $1.1m (31 December 2016: $1.4 million) relating to bank guarantees provided to lessors of business premises.

11.  Related party transactions  

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note.

Management considers that the Group has appropriate procedures in place to identify and properly disclose transactions with related parties and has disclosed all of the relationships identified and which it deemed to be significant.

The following table provides the total amount of transactions which have been entered into with related parties for the relevant financial year:


                               Sales to            Finance
                                related Purchases   income   Charges   Amounts  Amounts
                                parties      from     from      from   owed by  owed to
                                          related  related   related   related  related
    $m                                    parties  parties   parties   parties  parties
    Trading companies related
    to the ultimate shareholder
    3 months to 31 March 2017     13.8          -        -        -
    3 months to 31 March 2016      5.2          -        -        -
    At 31 March 2017                                                      18.7      0.1
    At 31 December 2016                                                   22.6        -
    Other companies related to
    the ultimate shareholder
    3 months to 31 March 2017       -         1.3        -        -
    3 months to 31 March 2016       -         0.8        -        -
    At 31 March 2017                                                       0.2        -
    At 31 December 2016                                                      -      0.1

Trading companies related to the ultimate shareholder  

During 2017 and 2016, Manganese Trading Limited (Jersey) and Pilbara Trading Limited (Jersey) traded with other trading companies related to the ultimate shareholder.  

Ore sold to related parties is shipped to Ukraine. The sales prices for transactions with related parties have been determined by reference to the published indices or the sales prices of Australian and Ghanaian ore sold to China, adjusted for the freight differential for shipping to the country of the related party, the end use application for the ores and adjusted for manganese content.

Finance companies related to the ultimate shareholder  

As at 31 March 2017, a related party loan balance of $737.5 million (31 December 2016: $737.5 million) was recognised in equity.

Other companies related to the ultimate shareholder  

Transactions with other companies related to the ultimate shareholder primarily relate to the provision of goods and services with companies providing management services to the Company.

12.  Events after the reporting period  

On 4 April 2017 the Company announced that holders of 89.84% of its 8.000% Senior Secured Notes due 15 May 2020 have locked up to tender their notes to and provide certain consents in relation to the proposed acquisition of Consmin by China Tian Yuan Manganese Limited, a subsidiary of Ningxia Tianyuan Manganese Industry Co., Ltd. ("TMI"). Pursuant to the Lock-up Deed, the Purchaser has launched the Tender Offer and Consent Solicitation on 4 April 2017. The Tender Offer is open to acceptance by all holders of the Notes. In order to become effective, the holders of at least 90% of the aggregate principal amount of the Notes must tender into the Tender Offer and provide their consent to certain amendments to the terms of the Notes.

On 4 April 2017, the Company announced that holders of 89.84% of the Notes (the "Consenting Noteholders") had locked up to tender their notes to and provide certain consents in relation to the Transaction, pursuant to the terms of a lock-up agreement between, amongst others, CTYML, the Company and the Consenting Noteholders (the "Lock-up Deed"). Pursuant to the Lock-up Deed, CTYML launched a tender offer and consent solicitation in respect of the Notes (the "Tender Offer and Consent Solicitation") the terms of which were set out in an offer to purchase and consent solicitation statement dated 4 April 2017 (the "Statement"). The Tender Offer and Consent Solicitation is open to acceptance by all holders of the Notes. In order to become effective, the holders of at least 90% of the aggregate principal amount of the Notes must tender into the Tender Offer and provide their consent to certain amendments to the terms of the Notes.

On 21 April 2017, the Company announced that CTYML was extending the expiration date set out in the Statement to 11:59pm (EST) on May 31, 2017 pending the approval of the Ghanaian government (the "Ghana Consent Condition"). On 8 May 2017, the Company announced that the Ghana Consent Condition had been satisfied and that CTYML was exercising its right to bring forward the Expiration Date of the Tender Offer and Consent Solicitation. CTYML gave notice that the Expiration Date should be brought forward to 11:59 pm EST on May 19, 2017 with the payment date expected to occur on or before May 24, 2017. It was further noted that in connection with the payment of interest on the Notes due on May 15, 2017 and in compliance with the terms of the Notes, the Company had elected to pay interest on the Notes for the May 2017 Interest Period entirely in cash at a rate equal to 8.000% per annum.

On 22 May 2017 the Company announced that the Tender Offer and Consent Solicitation launched by CTYML had successfully concluded with holders of 99.94% of the Notes having tendered their Notes and provided their consent to certain amendments to the terms of the Notes. On 25 May the Company announced that the Transaction had successfully closed with CTYML becoming the 100% legal and beneficial owner of the Company.

Glossary of Defined Terms  


                                       The Australian Securities Exchange, operated by ASX
                           "ASX"                             Limited (ABN 98 008 624 691).
                                    Bank cubic meter, being one cubic meter of undisturbed
                                       (in situ) material before it is drilled, blasted or
                           "BCM"                                                    mined.
                                     The act or process of increasing the concentration of
                                   valuable material (e.g., manganese) contained in ore as
                                      it naturally occurs in the environment on a per unit
                                  basis, and, at the same time, reducing the concentration
                                    of some of the non-valuable substances (e.g., iron and
                 "beneficiation"                                                  silica).
                                   A process in which manganese ores of varying grades are
                                        mixed together to produce ores or products with an
                      "blending"     average grade according to the product specification.
                                 International commercial term meaning "Cost and Freight,"
                                   whereby the quoted price includes all costs and freight
                                    to bring the goods to the port of destination from the
                                     port of departure, but does not require the seller to
                                      procure marine insurance against the risk of loss or
                           "CFR"                       damage to the goods during transit.
                                    International commercial term meaning "Cost, Insurance
                                       and Freight," whereby the quoted price includes all
                                    costs, insurance and freight to bring the goods to the
                           "CIF"           port of destination from the port of departure.
                                 A mining concession as defined in the Minerals and Mining
                    "concession"                                                      Act.
                                      CRU International Limited, a company incorporated in
                                 England and Wales with company number 00940750. CRU is an
                                      independent business analysis and consultancy group,
                                  focused on the mining, metals, power, cables, fertiliser
                           "CRU"                                     and chemical sectors.
                                    A "dry metric tonne unit," which corresponds to one 10
                                  kilogram unit of manganese. By way of example, the price
                                   in $ of a consignment of manganese ore is calculated by
                                   multiplying the U.S. dollar per dmtu price by the units
                                   of manganese of the ore in that shipment. For instance,
                                       if manganese ore with a manganese content of 48% is
                                  priced at $5.00/dmtu, the price for three tonnes of such
                          "dmtu"                  ore will be $720, calculated as follows:
                                                 48% cross 3,000kg = 1,440 kg of manganese
                                                    1,440kg / 10kg = 144 dmtu of manganese
                                                      144 dmtu cross $5.00 per dmtu = $720
                                      A tonne, being a metric unit of weight equivalent to
                                     1,000 kilograms, measured excluding the weight of any
             "dry tonne" or "dt"                                            water content.
                           "EMM"                             Electrolytic manganese metal.
                            "Fe"     Chemical symbol for Iron, based on the periodic table
                                        A metal product, usually containing iron and other
                                   metals, that is commonly used as a raw material feed in
                                   steelmaking to add strength or to aid various stages of
                                         the steelmaking process such as deoxidisation and
                                           desulphurisation. Examples include ferrochrome,
                    "ferroalloy"                          ferromanganese and ferrosilicon.
                                   Manganese ore with the majority of individual particles
                                   measuring less than a specified size. While there is no
                                 industry standard measurement, the Group's Australian and
                                 Ghanaian operations specify ores with particles measuring
       "fines" or "ore fines" or           between 1 and 12.5 millimeters and less than 25
                      "fine ore"                      millimeters, respectively, as fines.
                                    International commercial term meaning "Free On Board,"
                                   whereby the quoted price includes all activities needed
                                 to deliver the product to the port of departure, with the
                                    last cost included in the price being ship loading. As
                                    such, it excludes the cost of marine freight transport
                                     and insurance as well as unloading and transportation
                           "FOB"           from the arrival port to the final destination.
                                    Each of GMC, CMAL, Stratford Sun Limited, Consolidated
                                      Minerals (Hong Kong) Limited, PTL, MTL, Consolidated
                                         Minerals (Belgium) Limited, Consolidated Minerals
                                     Holdings (Australia) Pty Limited, CMPL, PMPL, Pilbara
                                 Chromite Pty Limited, Pilbara Contracting Pty Limited and
                     "Guarantor"                             Pilbara Trucking Pty Limited.
                                      A measure of the manganese content of manganese ore.
                                 There is generally no agreed industry definition of "high
                                    grade." Our Australian operations consider ore with an
                                   average manganese content above 44% to be "high grade."
                                    Unless otherwise specified, references to "high grade"
                    "high grade"  are to the definition used by our Australian operations.
                                        International Financial Reporting Standards of the
                          "IFRS"                 International Accounting Standards Board.
                          "JORC"            The Australasian Joint Ore Reserves Committee.
                                       1,000 bank cubic meters, being 1,000 cubic meter of
                                      undisturbed (in situ) material before it is drilled,
                          "kBCM"                                         blasted or mined.
                                   Kilo tonne. A unit of weight or capacity equal to 1,000
                            "kt"                                                   tonnes.
                                      A measure of the manganese content of manganese ore.
                                  There is generally no agreed industry definition of "low
                                    grade." Our Australian operations consider ore with an
                                     average manganese content of less than 44% to be "low
                                    grade." Unless otherwise specified, references to "low
                                       grade" are to the definition used by our Australian
                     "low grade"                                               operations.
                                         A work-related injury or illness resulting in the
                                  employee or contractor being unable to attend work for a
                           "LTI" full working day after an injury or illness has occurred.
                                   Manganese ore with the majority of individual particles
                                   measuring more than a specified size. While there is no
                                    industry standard measurement, the Group specifies ore
            "lump" or "lump ore" with particles measuring 6.3 millimeters or more as lump.
                                         Chromite ore has lump particle size measuring 6.3
                                                                      millimeters or more.
                         "mdmtu"                       One million dry metric tonne units.
                                      Chemical symbol for Manganese, based on the periodic
                            "Mn"                                                    table.
                                 A method of extracting rock or minerals from the earth by
                                  stripping away the top soil and the earth above the rock
                                         or minerals creating a pit from which the rock or
                                        minerals are removed. This method of mining can be
                                      contrasted with mining using extractive methods that
                                       require tunneling into the earth (i.e., underground
               "open pit mining"                                                  mining).
                                         A mineral or an aggregate of minerals (containing
                                    valuable constituents, including metals) of sufficient
                           "ore"                           value to be mined or extracted.
                                  The material that lies above the mining area of economic
                                       interest, i.e., the rock and soil that lies above a
                    "overburden"                           manganese or chromite ore body.
                                   Solid fuel added to a furnace to remove oxygen from the
                     "reductant"                       manganese ore fed into the furnace.
                                  The part of the manganese ore market that is composed of
               "seaborne market"                                   exported manganese ore.
                   "Shareholder"            Means Ultimate Beneficial Owner of the Company
                        "sinter"                                 The product of sintering.
                                   The process of combining or fusing metals, usually with
                                           pressure and temperature, by exposing them to a
                     "sintering"               temperature just below their melting point.
                                     The price at which a physical commodity for immediate
                    "spot price"                sale is selling at a given time and place.
                                   The ratio of the volume of overburden waste material to
                                    the volume of ore in an open pit mine. For instance, a
                                  stripping ratio of "5" means that five BCM of waste rock
               "stripping ratio"           must be removed for every one BCM of ore mined.
                                      An excavation made in a pit (generally at the lowest
                                  point) to collect water, which can then be pumped to the
                          "sump"            surface or to another sump nearer the surface.
                                       Finely ground waste rock from which the majority of
                      "tailings"          valuable minerals or metals have been extracted.
                      "tenement"           A mining tenement as defined in the Mining Act.
                                       A tonne, being a unit of weight equivalent to 1,000
                                     kilograms, measured including the weight of any water
                     "wet tonne"                                                  content.
                                    The approximately 100 square kilometer area inside the
                                    Woodie Woodie tenement package within which all of our
                                       current Australian manganese mining operations take
        "Woodie Woodie corridor"                                                    place.
                                  The approximately 1,250 square kilometers of land in and
                                    around the Woodie Woodie mine in the Pilbara region of
          "Woodie Woodie region"  Western Australia, excluding the Woodie Woodie corridor.

Company Information  

For further information, please visit our website http://www.consmin.com or contact:

Consmin: +44(0)1534-513-300

Mark Camaj, General Manager, Marketing

Jurgen Eijgendaal, Managing Director, Ghana

David Slater, Executive Director and CFO



Source: PR Newswire (May 26, 2017 - 9:57 AM EDT)

News by QuoteMedia
www.quotemedia.com

Legal Notice