OM Holdings Limited (ASX: OMH)
ASX/MEDIA RELEASE
27 MAY 2009
HIGHLIGHTS
Aggressive, fully expensed pre-strip and ROM building
activities are being successfully undertaken during 1H 2009 at Bootu
Creek
New market opportunities targeted and identified in
the Chinese 35-40% Mn grade segments
for high value-in-use products
Laser focus on extracting maximum value from the
Mineral Resource by aligning operating capability with the appropriate
production strategy for the prevailing market conditions
C1 unit cash operating costs forecast to fall to ~A$3.50/dmtu
for the months of May and June 2009
A$13M rejects re-treatment plant and US$18M sinter ore
plant in China are key components of delivering the strategy
All resolutions passed at OMH?s
AGM except the proposal to elect a Consolidated Minerals nominee to the OMH
Board
Diversified commodity marketing, metals and mining house OM Holdings
Limited (ASX: OMH
OMH) has outlined further details of a
significant new production strategy for its Australian manganese operations at Bootu
Creek in the Northern Territory.
The new production strategy is based on its new Mineral Resource and
operating mine plan, achieving production of 35-40% Mn
grade unique high value-in-use products in response to prevailing market conditions, combined with the ability to achieve greater
operational flexibility and drive lower operating costs.
At the Company’s Annual General Meeting in Singapore yesterday
(Tuesday, 26 May), OMH CEO Peter Toth outlined the
Company’s new operating strategy which centred
on five key components, namely:
- continued focus on safety;
- aggressive
pre-stripping and ROM stockpile building during H1 2009;
- capitalising on the
identification of new market segment opportunities for OMM products in the
Chinese market;
- beneficiation
of low grade ore stockpiles during April and May 2009; and
- implementation of a
longer term production strategy further attuned to flexibility and
responsiveness to market conditions with effect from June 2009.
Mr Toth noted a significant improvement in the safety
performance of the Bootu Creek mine
since September 2008, with the operation achieving a more than 50% improvement
in its total recordable injury frequency rate.
He said the Company’s focus at Bootu
Creek was on aggressive, fully expensed pre-strip and run-of-mine (ROM)
stockpile building activities during the first half of 2009 to enable the new
production strategy to be fully implemented from June 2009 onwards.
This is in response to new market opportunities we have identified in
the Chinese market as a result of drastically changing market dynamics in the
current environment, Mr Toth
told shareholders at the AGM.
This changing environment is the result of the interaction of a complex
set of factors in the manganese market, including changing ore consumption and
blending dynamics and the fact that many higher cost, low grade Chinese
domestic and marginal seaborne ore producers are not economic and are ceasing
production at current prices, he continued.
While our traditional production strategy has focused on the delivery of
42% Mn
product, the new market opportunities in China which we have identified are in
the 35-38% Mn
and 38-40% Mn
product segments, for products with unique high value-in-use characteristics
around specific Mn, Fe and SiO2 ratios.
Our own and customer product trials for these new products have been undertaken
with excellent results and we have shipped in May the first trial cargo of
35-38% Mn
grade product which was sold at a premium to the existing benchmark price.
In total, the Company expects to make a total of six shipments during Q2
2009 which will include a mixture of 42%, 35-38% and 38-40% Mn
grades, Mr Toth said.
This is what is driving a significant re-alignment of our production
strategy including the execution of previously announced initiatives such as
the A$13 million rejects re-treatment plant currently under construction at Bootu
Creek which will enable us to extract additional value from existing stockpiles
of low-grade ROM which have not previously been used. This material will be
upgraded to a saleable 35% Mn product for
which we believe there is a significant market niche emerging in the Chinese
alloy and steel industry; in addition to being the perfect sinter feed
material.
As a result of the recent Mineral Resource/Ore Reserve increase and a
very comprehensive process centred around the design and implementation of a new mining plan at
Bootu
Creek, we are developing a capability to maximise
value around an inherent production flexibility which enables us to match the
lowest cost production options to prevailing market conditions, Mr Toth said.
As part of the new production strategy, OMH is building its high-grade
ROM inventory to around 500,000+ tonnes by June 2009,
while processing low grade ROM stocks to produce 35-38% Mn
grade products during April and May. This will be followed by a switch to
processing high grade ROM into a 38% Mn grade product
from June 2009 onwards. C1 unit production costs are forecast to be around A$3.50/dmtu during May
and June.
Mr Toth said this would largely be driven by the new optimised
Bootu
Creek mine plan developed for 2009/10 which is focused on ensuring maximum
production flexibility and lowest cost production scenarios centred
on grade, yield and metal recovery targets.
Once implemented from June onwards, the new production strategy will
enable us to extract maximum value from Bootu Creek’s
inherent production flexibility allowing us to align our business
with the prevailing market to deliver a low-cost, high yield, high value-in-use
products.
The internally funded A$13 million rejects re-treatment plant at Bootu
Creek and the new US$18 million sinter ore plant currently under construction
at the Company’s 100%-owned Qinzhou Smelter
in Guangxi, China represent key components of the new production strategy.
The rejects re-treatment plant is scheduled to be commissioned in
October 2009 and will increase the overall production capacity at Bootu
Creek by 150,000tpa to 850,000tpa, producing a 35% Mn
grade product. The 300,000tpa sinter ore plant, which is scheduled to be
commissioned in the December 2009 Quarter, will provide value added services to
fines ore from Bootu Creek, supply much needed
sinter product to the Company’s own smelter and make sinter product
available for sale into the Chinese market.
Mr Toth said the Company’s longer term strategy remained
the positioning of OMH as a diversified steelmaking raw materials producer
through a combination of organic growth options being pursued at Bootu
Creek and the OMQ sinter ore plant, new business development initiatives, and
M&A and strategic investment opportunities being considered and
evaluated.
Annual General
Meeting Results
OMH also confirms that all resolutions were passed at the Company’s
Annual General Meeting in Singapore yesterday, except the proposal which was
considered to elect a nominee of shareholder Stratford Sun Limited (a company
controlled by Consolidated Minerals Limited (ConsMin)),
to the OMH Board as a non-executive Director.
The resolution to seek to approve the appointment of the Stratford Sun
Limited’s nominee was rejected on a poll conducted with 316,594,230 votes
cast Against the resolution.(representing 82.7% of the
total votes cast) compared to 66,443,378 votes cast For the resolution
(representing 17.3% of the total votes cast).
Mr Toth thanked shareholders for their support, noting the key
reasons put forward for the Company’s opposition to this proposal. As
previously announced, ConsMin is a recognised
direct competitor to OMH and it specifically competes with OMH in fundamental
operational areas most importantly in the marketing
and trading of manganese ore and alloy products, specifically in the key
Chinese manganese ore and Asian manganese alloy markets.
The Board believes that, if a ConsMin
representative was to be appointed to the OMH Board, it would be impossible to
manage these conflicts without fundamentally changing the nature of information
presented to and discussed by the OMH Board, thereby substantially hindering
the effective and efficient management of the Company.
This is an appropriate outcome which is in the best interests of all
shareholders. Having said that, we look forward to continuing to work with
Stratford Sun, and our other major shareholders, towards the continued growth
and development of OMH into the future, he added.
- ENDS -
|
Released by:
Nicholas Read
Read Corporate
Telephone: +61-8 9388 1474
Mobile: +61 419 929
046
|
On behalf of:
Mr Low Ngee Tong,
Executive Chairman
Telephone: +65 6346 5515
Mr Peter Toth, CEO
Telephone: +65 6346 5515
Mobile: +65 9455
0077
|
BACKGROUND PROFILE OF OM HOLDINGS LIMITED
OMH listed on the ASX in March 1998 and has its
foundations in metals trading ? incorporating
the sourcing and distribution of manganese ore products and subsequently in
processing ores into ferro-manganese
intermediate products. The OMH Group now operates commercial mining operations ? leading to a fully
integrated operation covering Australia, China and Singapore.
Forward-Looking Statements
This release may
include forward-looking statements. These forward-looking statements are based
on management’s expectations and beliefs concerning future events. Forward-looking statements are necessarily subject to risks,
uncertainties and other factors, many of which are outside the control of OM
Holdings Limited, which could cause actual results to differ materially from
such statements. OM Holdings Limited makes no undertaking to
subsequently update or revise the forward-looking statements made in this
release to reflect events or circumstances after the date of this release.