27 July 2012
Solid operating performance with full year mining and smelting production guidance for all metals maintained
Mining production of 151kt of zinc in concentrate, up 23kt (18%) on H2 2011 (128kt)
Own mine production of 135kt, up 27kt (25%)
Langlois ramp up completed in line with management expectations with production of 17kt, up 16kt
Tennessee Mines showing improved performance due to optimisation program with production of 49kt, up 7kt (17%)
Talvivaara deliveries of 16kt, down 4kt (20%)
Mining production of other metals up on H2 2011; gold 16%, silver 11%, copper 43% and lead 16%
Coricancha suspension order lifted and milling operations recommenced in July 2012
Zinc metal production of 538kt: smelters in line to deliver approximately 1.1 million tonnes in 2012
Average zinc mining C1 cash cost of USD 1,255 per tonne of payable zinc (USD1,095/t in H2 2011) impacted by production mix (lower volumes from Talvivaara and ramp up of Langlois) and lower by-product prices
Smelting operating costs per tonne of EUR 568 impacted by a strong Australian dollar
Contribution from mining segment continues to grow in line with strategy; group underlying EBITDA and PAT adversely impacted by macro-economic conditions
Group underlying EBITDA of EUR 111 million, down 22% on H2 2011 (EUR 142 million)
Mining EUR 56 million, up 22%, in line with strong production growth
Smelting EUR 79 million, down 33%, impacted by lower treatment charges and reduced contribution from silver bearing material at Port Pirie of EUR 13 million compared to EUR 49 million in H2 2011
Mining represents 50% of group underlying EBITDA, compared to 32% in H2 2011
Mining underlying EBITDA per tonne EUR371, up 4% on H2 2011 (EUR357)
Smelting underlying EBITDA per tonne EUR147, down 30% on H2 2011 (EUR210)
EPS of EUR(0.18) (PAT of EUR(32) million) impacted by one-off impairment charges of non-core assets
Strong financial position through proactive initiatives
Substantial reduction in net debt by EUR 100 million in H1 2012 to EUR 618 million
Gearing reduced from 35.3% to 32.7% at the end of H1 2012
Capital distribution of EUR 0.16 per share to occur on 13 August 2012
Commenced a group wide review of corporate offices, mining and smelting operations to identify opportunities to sustainably reduce operating costs
Capital expenditure of EUR 118 million in H1 2012 (down 32% on H2 2011); full year spend expected to be at lower end of guidance
Continue to explore value accretive opportunities to protect and grow smelting segment profitability by various organic growth initiatives to recover the maximum value inherent in our raw materials through improved processing capabilities (commenced production of indium metal at Auby)
 C1 cash costs are defined by Brook Hunt as: the costs of mining, milling and concentrating, on-site administration and general expenses, property and production royalties not related to revenues or profits, metal concentrate treatment charges, and freight and marketing costs less the net value of by-product credits.
 Mining segment underlying EBITDA per tonne of zinc in concentrate produced
 Smelting segment underlying EBITDA per tonne of zinc metal produced
 Gearing: net debt to net debt plus equity at end of period
Commenting on the half year 2012 full year results, Roland Junck, Chief Executive Officer of Nyrstar, said,
"We are pleased to report strong operating performance by the mining and smelting segments of the business with production from our own mines up 25% over the half and production from the smelters in line with management's expectations. Group EBITDA was down 22% resulting from a very challenging macro environment with weak metal prices and lower treatment charges. In line with our strategy, to move towards higher margins, mining now represents 50% of group EBITDA, up from 32% in H2 2011. We continue to focus on controlling costs and ensuring a reduction in debt as we face further short term volatility in our markets.
Ramp-up of the Langlois mine has been successfully completed, we have improved performance at the Tennessee mines in Q2, and the production recovery and switch to gold campaigning at the El Toqui mine proceeded to plan, all of which mitigated disruptions to production at El Toqui in the first quarter caused by social demonstrations which were unconnected to the mine and the suspension of milling operations at the Coricancha mine at the start of the second quarter. Pleasingly, the suspension order on milling operations at the Coricancha mine was lifted during July and we maintain our confidence in the full year production guidance for all metals that we issued at the beginning of the year. Following production issues experienced in the first quarter, the smelting segment recovered well in the second quarter and we continue to expect production from the smelters of approximately 1.1 million tonnes of zinc metal over the year.
The underlying EBITDA contribution from our mining segment has continued to grow, now representing 50% of group underlying EBITDA up from 32% in H2 2011. This growth is also evident in the EBITDA contribution per tonne from the mining segment in the first half which, despite by-product prices falling heavily, was up 4% to EUR 371. At the same time, EBITDA per tonne in the smelting segment continues to be under pressure with a decline of 30% to EUR 147 compared to H2 2011.
The mining and smelting industries have both seen cost inflation continue over H1 2012 and costs at Nyrstar have not been immune to this trend. The average C1 cash cost at our mines were up 15% on H2 2011, due primarily to the ramp-up completion at the Langlois mine, the optimization of the Tennessee Mines, a change in production mix and lower by-product prices. We continue to implement cost reduction programmes across each of our operations and as the mines we have acquired over the past few years increase to full production, C1 cash costs are expected to reduce over the medium term to USD 1,000 per tonne or less.
Profit after tax was impacted by a one-off impairment charges of EUR 17 million against non-core assets, with an after tax loss of EUR 32 million.
The strength of our balance sheet is important as macroeconomic conditions deteriorate and as we continue to invest through the cycle. Therefore, we have taken a number of measures to improve our balance sheet over the half. Improvements in working capital management have delivered a EUR 100 million reduction in our net debt position compared to the end of H2 2011, and we took the prudent step of writing down a number of non-core businesses.
A core element of our strategy is achieving excellence in everything we do. This means ensuring that our operations function as efficiently and effectively as possible and are profitable in all market conditions, enabling Nyrstar to remain competitive in the global metals and mining industry. We are currently conducting a group wide review of our corporate offices, mining operations and smelting operations with the intent to identify opportunities to sustainably reduce our operating costs. In addition, it is expected that capital expenditure in 2012 will be less than previously guided, as certain non-growth related capital expenditure programs are deferred into 2013.
We have spoken for some time of the likelihood of continued short term volatility in our markets. The first half of 2012 was clearly evidence of this. At present it is difficult to see how macro-economic conditions in the second half of 2012 could significantly improve on conditions that prevailed in the first half due to the lack of visibility with respect to any meaningful catalysts to address the financial and political challenges in Europe, ongoing conflicting signals on the strength of the US recovery and uncertainty regarding China. That said, we continue to believe strongly in the medium and long term fundamentals of the zinc and other related commodity markets. We continue to execute our strategy of moving to a higher margin business by delivering further growth from our internal and external pipeline of projects, supported by prudent balance sheet management."
Management will discuss this statement in a conference call with the investment community on 27 July 2012 at 09:00am Central European Time. The presentation will be webcast live on the Nyrstar website, www.nyrstar.com, and will also be available in archive.
This release includes forward-looking statements that reflect Nyrstar's intentions, beliefs or current expectations concerning, among other things: Nyrstar's results of operations, financial condition, liquidity, performance, prospects, growth, strategies and the industry in which Nyrstar operates. These forward-looking statements are subject to risks, uncertainties and assumptions and other factors that could cause Nyrstar's actual results of operations, financial condition, liquidity, performance, prospects or opportunities, as well as those of the markets it serves or intends to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. Nyrstar cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which Nyrstar operates may differ materially from those made in or suggested by the forward-looking statements contained in this news release. In addition, even if Nyrstar's results of operations, financial condition, liquidity and growth and the development of the industry in which Nyrstar operates are consistent with the forward-looking statements contained in this news release, those results or developments may not be indicative of results or developments in future periods. Nyrstar and each of its directors, officers and employees expressly disclaim any obligation or undertaking to review, update or release any update of or revisions to any forward-looking statements in this report or any change in Nyrstar's expectations or any change in events, conditions or circumstances on which these forward-looking statements are based, except as required by applicable law or regulation.
Nyrstar is an integrated mining and metals business, with market leading positions in zinc and lead, and growing positions in other base and precious metals; 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, China and Australia and employs over 7,000 people. Nyrstar is incorporated in Belgium and has its corporate office in Switzerland. Nyrstar is listed on NYSE Euronext Brussels under the symbol NYR. For further information please visit the Nyrstar website, www.nyrstar.com
For further information contact:
The full press release can be downloaded from the following link:
Press Release (English)
Press Release (Dutch)
Press Release (French)