Mineral Deposits limited

Published : July 28th, 2016

2Q 2016 Operations Review

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Keywords :   9/11 | Australia | Cash | Consequence | Debt | France | Ilmenite |

2Q 2016 Operations Review

2Q 2016 OPERATIONS REVIEW

MDL's primary asset is a 50% interest in the TiZir joint venture ('TiZir'), which owns the Grande Côte mineral sands operation ('GCO') in Senegal, West Africa and the TiZir Titanium & Iron ilmenite upgrading facility ('TTI') in Tyssedal, Norway. ERAMET of France is MDL's 50% joint venture partner in TiZir.

KEY POINTS

  • Record sales of zircon, rutile and leucoxene

  • GCO mining operations achieved a record average throughput in June of 7,350tph

  • Sustained ramp up progress at TTI

  • Improving high grade titanium feedstock markets

  • Exited position in World Titanium Resources, realising proceeds of A$6.45 million in April

GCO

Mining operations at GCO continued to demonstrate the ability to deliver nameplate targets (with the dredge, for example, averaging a throughput rate of 7,350tph for the month of June). Efforts focused on ongoing optimisation projects and achieving operational consistency. A new mine manager is being appointed to assist in the timely delivery of these objectives.

In the mineral separation plant ('MSP'), zircon yields were back on par with the record production levels achieved in 4Q 2015 and rutile & leucoxene production also increased throughout the quarter. These improving yields follow the

completion of a number of optimisation projects successfully commissioned during the quarter, including an up‐current classifier in the feed prep circuit and middling circuit upgrade in the primary dry mill circuit at the MSP. Quarterly MSP activity also focused on optimising the product specification of GCO ilmenite consumed by TTI which, in turn, will enhance titanium slag quality at TTI. Implementation of these modifications is partly responsible for the decrease in ilmenite production during the quarter.

Record sales volumes for zircon and rutile & leucoxene were achieved during the quarter. The sales team continued its initiatives to take advantage of the high quality zircon produced at GCO. Sales volumes of ilmenite in 2Q 2016 were significantly higher than 1Q 2016 sales, due largely to timing of shipments.

GCO production volumes

100% basis

2Q

2015

3Q

2015

4Q

2015

1Q

2016

2Q

2016

1H

2015

1H

2016

Mining

(kt)

7,522

8,165

11,033

9,583

10,291

15,562

19,874

Ore mined

Heavy mineral concentrate

produced

(kt)

136.6

176.0

188.7

140.7

138.9

268.3

279.6

Finished goods production

92,783

187,578

199,964

Ilmenite

(t)

97,789

113,679

126,433

107,181

Zircon

(t)

11,357

11,159

13,614

10,713

13,608

20,475

24,321

Rutile & Leucoxene

(t)

1,247

1,076

1,353

1,906

2,524

2,882

4,430

Mineral Deposits Limited ABN 19 064 377 420

Level 17 530 Collins Street Melbourne VIC 3000 Australia T +613 9618 2500 F +613 9621 1460 E [email protected] Wmineraldeposits.com.au

GCO sales volumes

100% basis

2Q

2015

3Q

2015

4Q

2015

1Q

2016

2Q

2016

1H

2015

1H

2016

Sales volume

118,649

135,908

183,650

Ilmenite

(t)

64,051

145,551

138,958

65,001

Zircon

(t)

12,196

11,415

11,742

9,661

12,758

18,698

22,419

Rutile & Leucoxene

(t)

1,406

1,804

1,379

1,740

2,300

1,428

4,040

Grande Côte Operations, Senegal, West Africa

TTI

The ramp up of operations at TTI continues to proceed well, with the operation of the furnace in particular exceeding expectations.

Performance in 1H 2016 was impacted by the ramp up of production following the reline and capacity expansion project undertaken at the end of 2015. However, titanium slag production reached levels close to those achieved in 1H 2015, reflecting the continued success of TTI's ramp up program. There were periods during the quarter when the furnace was operating close to its expanded nameplate capacity. Optimisation projects aimed at maintaining the performance of the operations at its expected capacity will continue throughout 2016.

Despite the ramp up of operations, TTI achieved a positive EBITDA of US$6.0 million for the first half of the year, on the back of a strong sales performance. The new products from TTI have been well received by the market. This result is a significant achievement given the commencement of chloride slag production in January and the prevailing market conditions throughout 1H 2016.

TTI physical volumes

100% basis

2Q

2015

3Q

2015

4Q

2015

1Q

2016

2Q

2016

1H

2015

1H

2016

Titanium Slag Produced Sold

(kt)

(kt)

37.1

38.8

25.9

36.7

‐ 26.0

34.8

31.2

44.2

50.2

80.9

69.0

79.0

81.4

High Purity Pig Iron

Produced Sold

(kt)

(kt)

20.2

23.5

15.0

17.0

‐ 4.3

14.1

9.9

17.8

20.5

44.2

43.3

31.9

30.4

TiZir Titanium & Iron ilmenite upgrading facility, Tyssedal, Norway

MARKETS

Strong sales in the quarter from both GCO and TTI demonstrate improving market conditions in the mineral sands sector.

In respect of high grade titanium feedstocks, the sector has benefited from a strong supply side response among other developments in recent times. These included:

  • plant closures, idled capacity and inventory destocking particularly by major producers

  • a lack of available capital which has undermined the development of both greenfield and brownfield projects

  • closure of mining operations due to ore body depletion

  • financial pressures encouraging consolidation and rationalisation

    Titanium dioxide inventories have also been reported by several producers to have reached normal levels for the first time in four years.

    This supply side response is finally being recognised on the demand side with price rises being achieved by pigment producers in recent pricing negotiations. Strong margins are currently being enjoyed by downstream pigment users, providing a further indication that a demand recovery is underway.

    While the demand for zircon remained steady and GCO benefited from the high quality of its zircon product, the price decreases announced by some major producers for standard and lower grade zircon products negatively impacted 2Q 2016 prices. While North American and European markets have slowed, they are showing signs of stabilising; in particular, positive signs are appearing in the European tile market.

    A strong increase in HPPI prices occurred in April followed by a correction in May. June prices appear to have stabilised.

    TIZIR

    At 30 June 2016, external borrowings (excluding shareholder loans) by TiZir amounted to US$362.7 million, comprising the senior secured bonds (including accrued interest) due September 2017 and amounts drawn under TTI's and GCO's working capital facilities.

    TiZir's cash and cash equivalents at 30 June 2016 were US$5.1 million, giving external net debt of US$357.6 million.

    OUTLOOK

    The joint venture will continue to focus on maximising production at GCO and ramp up activities at TTI in order to consolidate the benefits of integrating the two assets. A number of optimisation projects are expected to come to fruition in 3Q 2016. Cost reduction initiatives, to ensure product competitiveness and operational sustainability, will also remain ongoing at both operations.

    MDL CORPORATE

    As announced (ASX Releases: 4 March 2016 and 26 April 2016), the Company exited its position in World Titanium Resources Limited ('WTR'), with the proceeds from the sale amounting to A$6.45 million, and contributed US$4 million to ERAMET in part repayment of the US$11 million in funding that ERAMET has provided to TiZir on behalf of MDL.

    On 8 April 2016, MDL announced the appointment of Robert Sennitt as Managing Director, effective from that date. In association with this appointment, Executive Chairman Nic Limb relinquished his executive role and became non‐executive Chairman at the Annual General Meeting ('AGM') of the Company held 20 May 2016. Nic will continue in his role as Chairman of TiZir.

    Long‐serving director David Isles also retired at the AGM and, as a consequence, Bobby Danchin has assumed the role of Audit & Risk Committee Chairman and Nic Limb has been appointed as a member of the Nomination & Remuneration Committee.

    As announced on 20 May 2016, all AGM resolutions were passed by the requisite majority of the Company's Shareholders on a poll. Subsequently, the Company granted a total of 1,170,000 unlisted performance rights to members of its Executive team as long‐term incentives.

    MDL corporate position as at 30 June 2016:

  • issued shares were 103,676,341

  • unlisted unvested performance rights totalled 1,170,000

  • cash was US$6.7million (approx. A$9.0 million)

  • secured debt of US$7.2 million

Read the rest of the article at www.publicnow.com
Data and Statistics for these countries : Australia | France | Norway | Senegal | All
Gold and Silver Prices for these countries : Australia | France | Norway | Senegal | All

Mineral Deposits limited

PRODUCER
CODE : MDL.AX
ISIN : AU000000MDL9
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Mineral Deposits is a gold producing company based in Australia.

Mineral Deposits develops gold, ilmenite and zircon in Senegal.

Its main asset in production is SABODALA in Senegal and its main asset in development is GRANDE COTE in Senegal.

Mineral Deposits is listed in Australia and in Germany. Its market capitalisation is AU$ 343.7 millions as of today (US$ 252.1 millions, € 215.7 millions).

Its stock quote reached its highest recent level on April 01, 2011 at AU$ 7.46, and its lowest recent point on January 22, 2016 at AU$ 0.18.

Mineral Deposits has 196 990 000 shares outstanding.

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Corporate Presentations of Mineral Deposits limited
7/31/2007Quarterly Report June 2007
In the News and Medias of Mineral Deposits limited
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Annual reports of Mineral Deposits limited
2009 Annual report
QUARTERLY REPORT FOR THE PERIOD ENDED 30 JUNE 2008
Nominations of Mineral Deposits limited
6/7/2013MDL Nomination of Directors to the Board of Teranga Gold Cor...
1/19/2012Appointment of Non-Executive Director-Tom Whiting
4/2/2008Board Appointment - Executive Director
11/1/2007SENIOR EXECUTIVE APPOINTMENT – MINERAL SANDS DIVISION
Financials of Mineral Deposits limited
2/18/2016Financial Results for 2015 - Mineral Deposits
2/26/2014Financial Results for 2013 Year
1/23/2014Fourth Quarter 2013 Operations Review
10/21/2013Third Quarter 2013 Operations Review
7/26/2013Second Quarter 2013 Operations Review
Project news of Mineral Deposits limited
6/17/2010Grande C=F4te Definitive Feasibility Study Results
8/26/2009(Sabodala)Three Tonnes of Gold Produced at Sabodala
11/18/2008(Sabodala)SABODALA GOLD PROJECT – NEW RESERVE ESTIMATE
5/27/2008(Sabodala)SABODALA GOLD PROJECT – MINING FLEET ARRIVES
5/20/2008(Sabodala)2008 Technical report
4/18/2008(Sabodala)Sabodala Gold Project Update
2/7/2008(Sabodala) agrees US$130M bank debt package for construction and devel...
1/21/2008(Sabodala) Sabodala Gold Project - Underground Reserves Potential
10/24/2007(Sabodala)Sabodala and Niakafiri Resources and Reserves
9/25/2007(Grande Cote)Grande Côte Zircon Project
9/19/2007(Sabodala)SABODALA GOLD PROJECT : Mineralised Zone Extending North
8/16/2007(Sabodala)Sabodala Gold project - Formal Contract Signed with Ausenco
7/13/2007(Sabodala) High Grade Wide Ore Zone Depth Extensions at Sabodala
5/30/2007High Grade Hits at Sabodala
5/22/2007(Sabodala)Sabodala East Flat Zone Extends 210 metres
Corporate news of Mineral Deposits limited
7/28/20162Q 2016 Operations Review
5/20/2016Results of Annual General Meeting 2016
4/8/2016Board Succession & Appointment of Managing Director
1/15/2014Disposal of Teranga Shareholding
12/13/2013A$40 million Equity Placement
11/1/2013Increased interest in World Titanium Resources
8/15/2013First Half 2013 Results
7/4/2013Withdrawal of Director Nominations to the Board of Teranga G...
6/13/2012: Voluntary Delisting From Toronto Stock Exchange
1/3/2012Equity Position in World Titanium Resources
10/25/2011ERAMET and Mineral Deposits Limited Announce the Closing of ...
9/26/2011(Grande Cote)Grande Cote Continued Ramp-Up
7/28/2011ERAMET and Mineral Deposits have Signed Definitive Agreement...
7/18/2011Completes Retail Entitlement Offer
6/20/2011Joint Venture with Eramet and Equity Raising
7/31/2008Quarterly Report for the period ended 30 June 2008
4/30/2008Quarterly Activities Report for p/e 31 March 2008
4/14/2008 signs US$35 million bank debt facility
1/8/2008Quarterly Report for the period ended 31 December 2007
12/14/2007PROSPECTUS – TSX LISTINGd
12/13/2007PRICING OF OFFERING
11/28/2007GRANDE COTE PRESIDENTIAL DECREE SIGNED
11/12/2007REGIONAL GOLD DRILLING PROGRAMME UNDERWAY AT BRANSAN, SENEGA...
10/31/2007QUARTERLY REPORT FOR THE PERIOD ENDED 30 SEPTEMBER 2007
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