Ann: Memorandum of Understanding E25 Manganese Product, page-34

Not looking good for results due next Monday.
Mn ore at rock bottom and smelters in the red.
Still ploughing ahead with expansion plans nevertheless.

• Meanwhile, 25%-owned associate OM Materials (Sarawak) has set aside A$20mil for its phase 2 expansion, comprising largely a sinter plant which can lower its manganese alloy production cost. The capex plan, slated for completion in FY22F, entails: (1) the modification of two existing ferrosilicon furnaces to produce metallic silicon and silicomanganese; and (2) the construction of up to 4 more manganese alloy furnaces.

• While CMS guided for better prices of ferrosilicon and manganese alloy in 2H20 as economies reopen, it fell short of providing guidance as to whether OM Materials (Sarawak) will be in the red or black in FY20F. We assume the unit to only break even in FY20F. Better prices and sales volumes in 2H should help the unit to recoup losses incurred in 1H due to low prices and sales volume amidst the Covid-19 pandemic.