Nyrstar NV

Published : October 26th, 2011

2011 Second Interim Management Statement

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Published: 07:00 CEST 26-10-2011 /Thomson Reuters /Source: Nyrstar /XBRU: NYR /ISIN: BE0003876936

Nyrstar: 2011 Second Interim Management Statement


26 October 2011

HIGHLIGHTS

Continuing strong progress in the mining segment

  • Zinc in concentrate production up 35% in Q3 2011 compared to Q2 2011
  • Substantial increase in the production of other metals, namely copper, lead, silver and gold

 

Strong operating performance from smelting segment

  • Zinc metal production from smelters was 244,000 tonnes in Q3 2011 down 12% from Q2 2011 as a result of the planned maintenance shutdown at the Clarksville smelter and operational issues which impacted zinc casting at Overpelt

 

Continuing to deliver on strategy

  • Successfully completed the acquisition of Breakwater Resources with mining operations in Canada, Honduras and Chile for approximately �442 million in August 2011 
  • All key milestones in the integration plan to date for the Breakwater mines met
  • Level of zinc integration (zinc production from mines as a percentage of smelter production) now at 43% (assuming all mining operations at full production, including the Talvivaara streaming agreement and the Breakwater mines) a significant advancement on Nyrstar's stated strategy to further grow its mining segment

 

Production

Q3 2011

Q2 2011

D

Q1 2011

Zinc in concentrate ('000 tonnes)

52

38

35%

41

Zinc metal ('000 tonnes)

244

278

(12)%

282

Lead metal ('000 tonnes)

51

58

(12)%

54

Market

 

 

 

 

Average LME zinc price (US$/t)

2,223

2,249

(1)%

2,393

Average exchange rate (�/US$)

1.42

1.44

(1)%

1.37

 

Zinc in concentrate production from Nyrstar's mining operations increased substantially over the quarter, up 35% in Q3 2011 compared to Q2 2011, with the continued ramp-up of the mines (including a continuing increase in deliveries under the Talvivaara streaming agreement) and the inclusion of one months' production from the El Mochito, El Toqui and Myra Falls mines following the successful acquisition of Breakwater Resources at the end of August 2011.

With the exception of the East Tennessee Mines and the Talvivaara streaming agreement, production performance of Nyrstar's mining segment in Q3 2011 was in line with the Company's expectations. The total volume of ore milled in Q3 2011 increased by 17% from Q2 2011 (including one month of production from the El Mochito, El Toqui and Myra Falls mines). Recovery rates for zinc remained stable and zinc mill head grades in a number of instances increased, particularly at East Tennessee Mines (up 21%) and Campo Morado (up 7%). As previously announced, Nyrstar has been actively delineating the reserves and resources of its mines and developing robust life-of-mine plans that will be implemented over the next 12 months and are expected to deliver further growth in production and earnings consistent with previous guidance. Consequently, revised reserve and resource statements for the Company's mines are expected to be published in H1 2012.

In Q3 2011, the East Tennessee Mines (Young, Coy and Immel) demonstrated a continued improvement in production volumes, producing approximately 12,100 tonnes of zinc in concentrate (up 12% compared to Q2 2011) despite unplanned downtime on underground mobile equipment and the mill which resulted in lower than expected volumes of ore being milled.  The Middle Tennessee Mines (Elmwood, Cumberland and Gordonsville) demonstrated improved production at the Elmwood mine due to the completion of de-watering at the end of Q3 and increased volumes of ore moved and at the Cumberland mine due to both improved grade and volumes of ore moved. However, overall production at the Middle Tennessee Mines was 6% lower than in Q2 2011, primarily due to higher than planned mobile fleet downtime at the Gordonsville mine and repairs required to the underground infrastructure at the mines which impacted hoisting activities and consequently availability of ore for the mill.

In Q3 2011, deliveries of zinc in concentrate from Talvivaara under the streaming agreement continued to show strong progress with a 28% increase to 8,200 tonnes compared to the previous quarter. Based on the nickel production guidance issued by Talvivaara in April 2011, Nyrstar was anticipating that Talvivaara would produce approximately 44,000 to 56,000 tonnes of zinc in concentrate in 2011 (based on an assumed conversion ratio of 2 tonnes of zinc in concentrate for every 1 tonne of nickel in concentrate). However, on 7 October 2011, Talvivaara downgraded their guidance due to a revised operating strategy and reduced availability of hydrogen sulphide generators at their mine in Finland and Nyrstar now anticipates approximately 32,000 tonnes of zinc in concentrate to be produced by Talvivaara in 2011 and a continued ramp-up in 2012.

Nyrstar's mines also demonstrated improvements in the production of other metals during Q3 2011. Approximately 14,400 troy ounces of gold in concentrate, 907,000 troy ounces of silver in concentrate[1], 1,900 tonnes of lead in concentrate and 2,200 tonnes of copper in concentrate were produced in Q3 2011. These volumes represent respectively a 131%, 50%, 291% and 37% increase over Q2 2011.  

Smelter production in Q3 2011 was approximately 244,000 tonnes of zinc metal, with all of the smelters, except for Clarksville, operating at or close to full production volumes.  Production at the Clarksville smelter was impacted in July 2011 due to the planned 45 day outage of the roaster to replace the roaster dome refractory (a once in every thirty year event) and zinc casting production at Overpelt was impacted by operational issues on the casting lines which are expected to be made up by the end of the year.

The Port Pirie multi metals smelter produced increased volumes of high value by-products, including copper, silver and gold, compared to Q2 2011. Consequently, lead metal production in Q3 2011 was 11% lower than Q2 2011, primarily due to the slower throughput associated with the consumption of more complex concentrates. The production of silver and gold from Nyrstar's smelting segment increased by 10% and 143% respectively over the quarter.

The zinc price continued to be volatile in Q3 with the average zinc price falling by 1% to US$2,223/t compared to Q2 2011. However, this was partially offset by the euro depreciating against the dollar by 1% to average 1.42 during the quarter. In euro terms the average zinc price in Q3 2011 �1,573/t compared to �1,565/t in Q2 2011.  During Q3, the zinc price peaked on 26 July at US$2,495/t and fell to a low of US$1,870/t on 29 September. The significant zinc price decline at the end of Q3 has continued into Q4 and if sustained will have a negative impact on financial performance for 2011.


CONFERENCE CALL

Management will discuss this statement in a conference call with the investment community on 26 October at 10:00am Central European Time. The presentation will be webcast live on the Nyrstar website, www.nyrstar.com, and will also be available in archive.

[1] 464,900 troy announces produced at Campo Morado where 75% of that production is subject to a streaming agreement with Silver Wheaton Corporation whereby only $3.90 per oz is payable.


About Nyrstar
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, Australia, China,  Canada, the United States and Latin America and employs over 6,600 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:

Anthony Simms

Group Manager
Investor Relations

T: +41 44 745 8157

M: +41 79 722 2152

anthony.simms@nyrstar.com

Kate Dinon

Group Manager
Corporate Communications

T: +41 44 745 8154

M: +41 79 722 84 66

kate.dinon@nyrstar.com

Geert Lambrechts

Manager
Corporate Communications

T: +32 14 449 646

M: +32 473 637 892

geert.lambrechts@nyrstar.com

The full press release can be downloaded from the following link:



Press Release (English)
Press Release (Dutch)
Press Release (French)



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Data and Statistics for these countries : Australia | Belgium | Canada | Chile | China | Finland | Honduras | Switzerland | All
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Nyrstar NV

PRODUCER
CODE : NYR.BE
ISIN : BE0003876936
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Nyrstar is a zinc and silver producing company based in Belgium.

Nyrstar produces zinc, silver, copper, gold and lead in Mexico and in Peru, and holds various exploration projects in Mexico.

Its main assets in production are CORICANCHA in Peru and G-9 CAMPO MORADO in Mexico and its main exploration properties are CAMPO MORADO, EAST TENNESSEE and MIDDLE TENNESSEE in Mexico.

Nyrstar is listed in Germany. Its market capitalisation is €UR 459.4 millions as of today (US$ 588.4 millions, € 400.0 millions).

Its stock quote reached its highest recent level on June 24, 2005 at €UR 2.70, and its lowest recent point on November 28, 2008 at €UR 0.38.

Nyrstar has 935 640 000 shares outstanding.

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BERLIN (NYR.BE)
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