re: + + $41.0 million-- first half profit + +
/ MEDIA RELEASE 25 JANUARY 2005 CONSMIN $41.0 MILLION FIRST HALF PROFIT
Consolidated Minerals Ltd (ASX: CSM, AIM: CNM, FSE: CMN) today announced a strong increase in first half unaudited net profit after tax to $41.0 million, including a $19 million after tax profit on the sale of its stake in iron ore producer Portman Limited.
Directors have recommended a fully franked 6.00 cent interim dividend, double last year’s 3.00 cent interim dividend. Excluding the profit on the sale of the Portman stake, underlying first-half earnings increased by 203% with a record operating profit after tax of $22.0 million ($7.25 million previously) reflecting the continued strength of Consolidated’s manganese and chromite businesses.
The profit lays the foundation for a very strong full-year result, underpinned by traditionally stronger second-half operating conditions and increased prices following the forthcoming iron ore price settlement.
Sales revenue for the first half rose by 61% to $85.6 million, reflecting continued strong demand and price increases for the Company’s high-grade manganese (a key input to the global steel industry) and ongoing strength in the chromite ore market (a key input to the stainless steel industry).
Managing Director Michael Kiernan said the first-half result highlighted the underlying strength and strong cash generation of Consolidated’s core businesses with a threefold increase in net operating profit excluding the one-off gain from the sale of its Portman stake.
“The first half saw achievements in a range of areas including further exploration success at Woodie Woodie, further growth of our international customer base and significant progress in our nickel growth strategy,” Kiernan said. “Consolidated has been able to leverage off the current strong commodities cycle in carbon steel materials to lay the foundations for a very strong growth outlook.”
Consolidated’s interim results are included in its Bidder’s Statement for nickel producer Reliance Mining Limited (ASX: REM), which will be lodged with the ASIC and ASX shortly and despatched to Reliance shareholders.
The proposed Reliance acquisition is expected to form the core of a newly established nickel business unit, with immediate production in the world-class Kambalda nickel region of Western Australia through the Beta-Hunt mine.
POSITIVE SECOND HALF OUTLOOK Kiernan said the financial outlook for the second half was very positive, reflecting traditionally stronger second-half trading conditions combined with increasing manganese production at Woodie Woodie and expected further price increases.
“We will see the positive impact of increased manganese output following completion of the Woodie Woodie expansion and our recent decision to increase production to a new long-term level of 1mtpa by mid-year,” Kiernan said.
“In addition, manganese is expected to achieve a price increase of similar magnitude to the benchmark iron ore price for the fiscal year from April 1 due to finalised shortly.”
Most analysts have forecast a price increase for iron ore of up to 35%, following last year’s 18.62% increase. Consolidated has now committed or allocated all of its 2005 manganese ore production and recently reported that prices for first quarter 2005 shipments had been fixed at increased levels. ENDS
Released by: On behalf of: Jan Hope / Nicholas Read Michael Kiernan, Managing Director Jan Hope & Partners Consolidated Minerals Limited Telephone: (+61-8) 9388 1474 Telephone: (+61-8) 9321-3633 www.consminerals.com.au
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BACKGROUND INFORMATION – CONSOLIDATED MINERALS LIMITED Consolidated Minerals is a diversified, ASX S&P 200 Australian-based resource group (Code: CSM) with a strong growth focus in the carbon steel materials business.
The Company is also listed on the Alternative Investment Market (AIM) of the London Stock Exchange (Code: CNM) and the Frankfurt Stock Exchange (FSE) (Code: CMN). Consolidated has a sound profit base founded on its successful West Australian manganese operations at the Woodie Woodie mine in the State’s Pilbara region, supplemented by a growing production base at the Coobina Chromite mine in the same region.
The Company has a strong track record in the successful and cost-effective development and operation of mining projects. Woodie Woodie has a secure position as a reliable supplier of 600,000 tonnes per annum of highgrade, low-phosphorous manganese ore to markets in Asia and Europe, representing a sustainable 5% share of the world market. Consolidated’s position as an independent supplier of high-grade ore gives it an important strategic advantage in the world manganese market. The Company will increase manganese production to 1 million tonnes per annum by mid-2005 after completing a $6.5 million expansion project in December 2004.
The Coobina Chromite Project has recently increased production to capacity levels of 250,000 tonnes per annum of 42% chromite ore, representing a 2.5% share of the world market. Consolidated is also pursuing a number of growth opportunities including joint ventures and strategic investments in the carbon steel materials sector.
These include a joint venture with Andrew Forrest’s Fortescue Metal Group Limited in iron ore and a growth strategy in the nickel sector based on the establishment of a nickel business unit alongside its existing manganese and chromite operations.
As part of this strategy, Consolidated holds a strategic 19.65% interest in ASX-listed nickel sulphide explorer Mithril Resources Limited (ASX: MTH), which has an extensive portfolio of nickel-copper sulphide exploration projects in Australia as well exclusive access to BHP Billiton’s extensive Australian nickel geophysical database.
It also has a $6 million Joint Venture with ASX-listed Austminex Limited (ASX: ATX) to explore in and around the previously successful Nepean Nickel Mine, located near Coolgardie, and an exploration joint venture with Titan Resources NL (ASX: TIR) at the Munda tenement in the Widgiemooltha area.
Other assets include a 20% interest and strategic alliance with ASX-listed Reed Resources Limited (ASX: RDR), including an option to explore & develop potential titanium-nickel projects in Western Australia.
Consolidated has a strong shareholder base with major shareholders comprising the Hong Kong-based commodity trader Noble Resources Limited with 15.0%, Invesco Australia Limited with 5.1%, Portfolio Partners Ltd with 5.0%, Jenkins Investment Management with 4.9%, Directors with 3.85% and European trading partner DCM Decometal International with 3.4%.
Note: All Dollar references in this release are to Australian Dollars unless otherwise indicated.
CSM Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
