Publications Coal International Coal International English Coal International Chinese Coal International Russian Mining & Quarry World International Guide to the Coalfields Subscriptions Journals Search News Events Mines & Quarries Suppliers Contact











29 Jul 2010

Nyrstar announces 2010 Half Year Results


Highlights
Strong Financial Performance
- Strong growth in Underlying EBITDA with €93 million for H1 2010 (€62 million in H2 2009)
- First contribution to earnings from ramp-up of Tennessee Mines and Talvivaara mine
- Completed syndication of €400 million credit facility and €225 million bond offering in March 2010
- Gearing of 33% at 30 June 2010
Strong Operating Performance
- Zinc metal production up 22%, smelting costs per tonne contained despite euro depreciation
- Coricancha mine and mill re-commissioned, ramping up in H2 2010
- Continued improvement in safety and environmental performance
Delivering on Strategy
- Streaming agreement for 1.25 million tonnes of zinc in concentrate from Talvivaara in February 2010
- Acquired additional 11% of Ironbark Zinc in May 2010, taking interest to 31%
- Subsequently acquired remaining 15% of Coricancha mine on 7 July
- Subsequently acquired Contonga and Pucarrajo mines on 19 July
- Zinc production from own mines expected to reach 25% of zinc metal production by 2012
Comment
The Company's financial performance continued to improve in H1 2010, with Underlying EBITDA increasing 50% to €93 million (compared to €62 million in H2 2009). Correspondingly the Company's Underlying EPS was €0.43, up 115% on H2 2009 (€0.20). The Company retains a solid financial position with gearing of 33% at 30 June 2010.
Zinc metal production was up 22% for H1 2010 compared to H2 2009, primarily due to the ramp-up of the Balen smelter, which returned to full production at the end of Q1 2010. The ramp-up of Nyrstar's mines continued, with the Tennessee and Talvivaara mines producing approximately 34,000 tonnes of zinc in concentrate in H1 2010.
Whilst the zinc price declined significantly throughout the period, falling 33% from US$2575/tonne at the start of the year to US$1730/tonne on 30 June 2010, the Company's financial performance benefited from a 9% increase in the average zinc price from US$1982/tonne in H2 2009 to US$2155/tonne in H1 2010. The Company's financial performance also benefited from the decline in the EUR:USD exchange rate, which depreciated 15% from 1.44 at the start of the year to 1.22 by 30 June 2010 as the Company's earnings are largely denominated in US dollars, whereas a substantial proportion of operating costs are denominated in euros.
Earnings from the Company's smelting business increased by approximately 55% to an EBITDA of €85 million in H1 2010, supported by the increased production, the zinc price and the depreciation of the euro. The Company's mining business generated its first contribution to earnings, with EBITDA of €7 million in H1 2010, which is expected to increase significantly in the second half of the year with the continued ramp up of these assets.
The Company has continued to make significant progress in executing its strategy to selectively pursue opportunities in mining, entering into a streaming agreement for 1.25 million tonnes of zinc in concentrate from Talvivaara (Finland) in February, increasing its interest in Ironbark Zinc to approximately 31% in May, acquiring the outstanding 15% of the Coricancha mine (Peru) on 7 July, and acquiring the Contonga and Pucarrajo mines (Peru) on 19 July.
Zinc in concentrate production from the Company's mining business is expected to reach approximately 25% of the Company's zinc metal production by 2012. The Company continues to actively explore opportunities to continue to deliver on its strategy.
Roland Junck, chief executive officer of Nyrstar, said,
"The continued growth in our earnings reflects the strong performance of our smelting business, which benefited from higher production, stronger average metal prices, and the depreciation of the euro against the US dollar. Pleasingly, our mining business has already made a positive contribution to our earnings, and we expect this to increase significantly with the continued ramp up of these operations.
Following a number of important financing initiatives, Nyrstar retains a solid financial position with gearing of 33% at 30 June 2010, despite the significant acquisitions during the period. The subsequent acquisitions of the remaining 15% of the Coricancha mine and the acquisition of the Contonga and Pucarrajo mines in July will strengthen our mining business and operating presence in Peru. We are actively exploring additional opportunities to deliver on our strategy.
Demand in our primary markets continued to recover in the first half of 2010, although prices were volatile. Whilst in the short term markets are expected to remain volatile, the fundamental medium to long term outlook for zinc and other resources is strong, and will provide ongoing opportunities for growth."


http://www.nyrstar.com
Tradelink Publications Ltd.           Company Number: 03817488           VAT Number: GB 728672208           Powered by FAH-Designs Ltd.