MMG Ltd (MMG) today announced its fourth quarter 2017 production result highlighting record copper production at Las Bambas and first zinc production at Dugald River. MMG operations produced 598,196 t of copper in 2017, a record for the company and at the high end of the guidance range of 560,000 to 615,000 t. On the back of a record fourth quarter output, Las Bambas delivered 453,749 t of copper in copper concentrate in its first full year of commercial production.
“Following worldclass project delivery and ramp up, Las Bambas is now firmly established as one of the world’s top 10 copper mines in terms of production,” MMG Chief Executive Jerry Jiao said.
MMG’s Kinsevere operation in the DRC also delivered another strong year, its third consecutive year of 80,000 t of copper cathode production.
“MMG has developed a track record of strong and stable operating performance at Kinsevere, and the DRC remains an attractive region for future growth,” Jiao said. “We are, however, concerned that the revised mining code currently before the Congolese Senate fails to reflect an appropriate balance between returns and fostering future investment.”
Sepon delivered its strongest copper production quarter for the year, driven by solid operational performance and higher grade ores which will be mined and processed throughout 2018 and 2019. As previously discussed, MMG is conducting an expression of interest process for the Sepon asset with a shortlist of interested parties. An outcome is expected in the first half of 2018.
In Australia, zinc production commenced at Dugald River, with 12,412 t of zinc in zinc concentrate produced as part of commissioning activities during the December quarter. In total, MMG produced 86,595 t of zinc in 2017, an increase of 7% on 2016.
“The successful initial commissioning of Dugald River has been a remarkable effort, and we are on track to deliver this project under budget and ahead of schedule,” Jiao said. “Dugald River will ramp up to nameplate capacity of 1.7 Mt/y of mill throughput over coming months and we expect to produce 120,000 to 140,000 t of zinc in zinc concentrate in 2018. This asset comes on line at the ideal time of tightening zinc supply and higher prices.”
2017 zinc production at Rosebery was 74,803 t, above the guidance range of 65,000 to 72,000 t, due to the strong December quarter.
MMG expects continued strong copper production and improving zinc production as Dugald River (pictured) ramps up toward nameplate capacity in 2018. The company expects to produce 560,000 to 590,000 t of copper and 190,000 to 220,000* t of zinc in 2018.
The shareholders of Minera Las Bambas have resolved to use surplus funds to pre-pay a further $500,000,000 of principal outstanding under the $5,988,000,000 Project Facility that was established to finance Las Bambas project.
The pre-payment will take effect on 31 January 2018 and is expected to result in an annualised interest saving on borrowings of approximately $26,000,000, subject to prevailing LIBOR. The pre-payment follows a similar pre-payment of $500,000,000 made by Las Bambas on 31 July 2017 and the redemption of $338,000,000 of Convertible Redeemable Preference Shares by the company in early 2018.
“These pre-payments highlight the strong cash generating ability of the Company,” Jiao said. “Over the past six months we have taken a number of measures aimed at simplifying our capital structure, reducing funding costs and establishing a strong platform to drive growth and shareholder returns.”
* Including 120,000 to 140,000 t at Dugald River for expected pre and post-commercial production volumes. The exact split will be determined when Dugald River declares commencement of commercial operations.
