DRC – International copper and zinc mining company MMG on Wednesday revealed that its total copper sales volumes were up 7% in the first half of 2015, largely thanks to record production from its DRC-based Kinsevere mine.
As outlined in its interim financial results for the six months to June 2015, total first half year copper production of 98 264 t was 6% higher than the corresponding period in 2014, driven by excellent production at Kinsevere and Sepon (situated in Laos, next to Thailand).
Kinsevere contributed 39 095 t of copper cathode to this total, 17% higher than the same period in 2014. Its first half year performance represents a sustained production rate of 130% of nameplate capacity – a ramp-up achieved in just three years of MMG ownership and with no material capital investment.
Sepon produced a total of 44 632 t of copper cathode in the first half of 2015 – 4% higher than the same period in 2014. This result was driven by higher mill throughput – demonstrated by the achievement of a quarterly milling record despite the ongoing transition to harder ore types – and supported by further operational improvements.
Despite this, MMG’s revenue for the half of the year was unfortunately 7% lower than first half 2014 at US$1.1 billion, impacted by lower prices for all commodities, except for zinc.
Cutting costs to compensate for low commodity prices
“While lower commodity prices and higher depreciation and amortisation impacted our first half financial results, we continued to focus on what we can control – productivity and costs,” says Andrew Michelmore, CEO at MMG.
Driven by its focus on cost reduction and operating efficiency, the company achieved a 9% reduction in operating expenses. This result included additional costs associated with higher sales volumes and was assisted by favourable Australian dollar exchange rates.
“Our operating model also delivered additional cost savings, with administrative expenses 26% lower during the first half 2015 compared to the same period 2014. Favourable exchange movements and the absence of one-off costs associated with the acquisition and integration of Las Bambas in 2014 also contributed to lower administrative costs.”
EBITDA increased 3% to $376 million as a result of strong performance from operations.
MMG reported a loss of $48.0 million for the first half, primarily as a result of lower prices in addition to an increase in Century’s 2014 non-cash mine rehabilitation costs, and in line with expectations.