MMG (1208) H1 2020 earnings summary

Executive summary

• H1 2020 performance weakened amid COVID-19, lower commodity prices, Las Bambas sales and production constraints; EBITDA fell 41% YoY and attributable loss was $158m.

• Sites remained operational through the pandemic; cost discipline, liquidity measures and hedging were used to manage volatility and protect financial resilience.

Financial highlights

• Revenue fell 14% YoY; average copper and zinc prices were down 11% and 25%, respectively, driving more than $230m of negative price impact.

• Higher commodity sales volumes added $34.6m YoY, partly offsetting price weakness; lower production costs contributed savings of more than $57m.

• Attributable loss after tax was $158m; depreciation fell ~$45m and interest and financing costs declined by more than $52m YoY.

• Las Bambas had 52,000 tonnes of copper metal in concentrate inventory at end-July, estimated at $325m revenue or $143m EBITDA at then-current spot prices and H1 margin.

Outlook and guidance

• Las Bambas 2020 guidance was withdrawn; revisions depend on greater operational certainty around COVID-19, workforce availability and site accommodation.

• Kinsevere guidance: 68,000–75,000 tonnes of copper cathode at average cash cost of $1.80–$1.95/lb; Dugald River and Rosebery: 225,000–245,000 tonnes of zinc at average cash cost of $0.60/lb.

• Las Bambas concentrate stock drawdown was expected to continue into 2021; improved production and commodity prices were expected to support H2 performance.

• 2020 capex was expected to be $100m–$150m below original expectations, with much of the deferred spend likely shifting into 2021.