Alumina Limited (ASX: AWC) notes Alcoa Corp's ('Alcoa') quarterly earnings release.
To assist readers in understanding relevant market, operational and commercial matters of the AWAC joint venture, selected information from the Alcoa Bauxite and Alumina Segments, AWAC joint venture and Alumina Limited plus other market data is attached.
Alumina Limited's CEO, Mike Ferraro, said 'During this very challenging time, AWAC continues to focus on ensuring the safety of AWAC employees and their families, its customers and wider communities, while maintaining reliability of AWAC operations. Notwithstanding the pandemic, AWAC operations have been running at normal levels of production in 2020.
AWAC assets performed strongly during the first quarter, with cash costs of alumina production down by $1 per tonne and daily production comparable to that of the previous quarter. Despite the decline of the spot alumina price towards the end of the quarter, the average realised alumina price (which is on a one-month lag basis) of $279 per tonne was broadly in line with the previous quarter.
These factors contributed to the strong positive cash flows for AWAC and resulted in Alumina Limited receiving a $33.8 million cash distribution this month, up from $27.6 million for the corresponding distribution for the previous quarter. To preserve cash in the current market environment, AWAC will put on hold all growth capital expenditure for the remainder of 2020, reducing spend by approximately $30m and will also look to defer a similar amount of non-critical sustaining capex over the course of the year. Low net debt levels and AWAC's position as a tier one low cost producer means that Alumina Limited has the resilience to navigate these challenging market conditions.'
This ASX announcement was approved and authorised for release by Mike Ferraro, Chief Executive Officer.
About AWAC & Alcoa's Earnings Release
Alumina Limited owns 40% of each of the AWAC entities, which form a part of the Alcoa bauxite & alumina business segments. The Alcoa aluminium business segment includes the AWAC Portland smelting operations. The operating Afobaka power station and closed operations are included in Transformation & legacy pension/OPEB. Therefore, the AWAC results cannot be directly inferred from the Alcoa earnings release. Further, unlike Alumina Limited, Alcoa reports under US GAAP.
Forward-looking statements
This document may contain certain forward-looking statements, including forward-looking statements within the meaning of the US Private Securities Litigation Reform Act of 1995. The words 'anticipate', 'aim', 'believe', 'expect', 'project', 'estimate', 'forecast', 'intend', 'likely', 'should', 'could', 'will', 'may', 'target', 'plan' and other similar expressions (including indications of 'objectives') are intended to identify forward-looking statements. Indications of, and guidance on, future financial position and performance and distributions, and statements regarding Alumina Limited's future developments and the market outlook, are also forwardlooking statements.
Any forward-looking statements contained in this document are not guarantees of future performance. Such forward-looking statements involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Alumina Limited and its directors, officers, employees and agents that may cause actual results to differ materially from those expressed or implied in such statements. Those risks, uncertainties and other factors include (without limitation): (a) material adverse changes in global economic conditions, alumina or aluminium industry conditions or the markets served by AWAC; (b) changes in production or development costs, production levels or sales agreements; (c) changes in laws, regulations or policies; (d) changes in alumina or aluminium prices or currency exchange rates; (e) Alumina Limited does not hold a majority interest in AWAC and decisions made by majority vote may not be in the best interests of Alumina Limited and (f) the other risk factors summarised in Alumina Limited's Annual Report 2019. Readers should not place undue reliance on forward-looking statements. Except as required by law, Alumina Limited disclaims any responsibility to update or revise any forward-looking statements to reflect any new information or any change in the events, conditions or circumstances on which a statement is based or to which it relates.
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