Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  Australian Stock Exchange  >  ACN 004 410 833 Ltd    ARI   AU000000ARI0

ACN 004 410 833 LTD

(ARI)
SummaryNewsCompany 
News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector news

Arrium : Mining Quarterly Production Report 21 Jan 2016

share with twitter share with LinkedIn share with facebook
01/20/2016 | 07:09pm EDT

Microsoft Word - ARI Mining Quarterly production report December 15 210116.doc Arrium Mining Quarterly Production Report For the quarter ended 31 December 2015


Summary


  • Sales 2.13Mt (dmt)

  • Sales YTD 4.21Mt, FY16 target ~9Mt

  • Average Platts index price (62% Fe CFR) US$47/dmt, down US$8/dmt on prior quarter

  • Average realised price ~US$37/t CFR (dmt), down US$11/t on prior quarter

  • Average realised price ~A$51/t CFR (dmt), down A$15/t on prior quarter

  • Low price premium for lump ores, reduction in proportion of lump sales

  • Average grade of shipments 58.4% Fe - in line with guidance

  • Average cash cost loaded on ship A$36.1/wmt1

  • YTD average cash cost loaded on ship A$35.1/wmt1 - 23% reduction on prior half

  • Average total cash cost (CFR China) A$57.8/dmt2, up A$0.4/dmt on prior quarter

  • YTD average total cash cost (CFR China) A$57.6/dmt2 - 11% reduction on prior half


Operations3


Arrium Mining Total


Dec Qtr


Sep Qtr


Variance

Variance

%

previous Qtr


FY 16 YTD


FY 15 YTD


Variance on YTD pcp


Variance

% YTD

pcp

Ore mined3

Ore Processed - DSO

(wmt)

1,745k

2,648k

-903k

-34%

4,393k

7,577k

-3,184k

-42%

(wmt)

1,963k

1,809k

154k

9%

3,772k

6,017k

-2,245k

-37%

Ore Processed - Beneficiated

(wmt)

429k

479k

-50k

-10%

908k

1,033k

-125k

-12%

Ore shipped4


(dmt)


1,396k


1,342k


54k


4%


2,738k


4,675k


-1,937k


-41%

  • Fines

  • Lump

(dmt)

730k

852k

-122k

-14%

1,582k

2,068k

-486k

-24%

Total

(dmt)

2,126k

2,194k

-68k

-3%

4,320k

6,743k

-2,423k

-36%

Average grade of ore shipped

58.4%

58.4%

0.0%

0%

58.4%

59.7%

-1.3%

-2%


Middleback Ranges


Dec Qtr


Sep Qtr


Variance

Variance

%

previous Qtr


FY 16 YTD


FY 15 YTD

Variance on YTD pcp

Variance

% YTD

pcp

Ore mined3

Ore Processed - DSO

(wmt)

1,745k

2,648k

-903k

-34%

4,393k

5,037k

-644k

-13%

(wmt)

1,963k

1,809k

154k

9%

3,772k

4,066k

-294k

-7%

Ore Processed - Beneficiated

(wmt)

429k

479k

-50k

-10%

908k

1,033k

-125k

-12%

Ore shipped4


(dmt)


1,396k


1,337k


59k


4%


2,733k


2,776k


-43k


-2%

  • Fines

  • Lump

(dmt)

730k

852k

-122k

-14%

1,582k

2,068k

-486k

-24%

Total

(dmt)

2,126k

2,189k

-63k

-3%

4,315k

4,844k

-529k

-11%

Southern Iron


Dec Qtr


Sep Qtr


Variance

Variance

%

previous Qtr


FY 16 YTD


FY 15 YTD

Variance on YTD pcp

Variance

% YTD

pcp

Ore mined3

Ore Processed - DSO

(wmt)

0

0

0

0%

0

2,540k

-2,540k

-100%

(wmt)

0

0

0

0%

0

1,951k

-1,951k

-100%

Ore Processed - Beneficiated

(wmt)

n/a

n/a

n/a

n/a

n/a

n/a

n/a

n/a

Ore shipped4


(dmt)


0


5k


-5k


-100%


5k


1,257k


-1,252k


-100%

  • PK Fines

  • SMR for Blending

(dmt)

0

0

0

0%

0

642k

-642k

-100%

Total Ore Shipped

(dmt)

0

5k

-5k

-100%

5k

1,899k

-1,894k

-100%


Production and Shipping


Hematite ore mined in the Middleback Ranges for export was 1,745k (wmt) for the quarter, down 903k (wmt) on the prior quarter. Mining activity levels in the first quarter benefited from increased utilisation of the mining fleet at the Iron Knob Mining Area (IKMA). Shipments for the quarter were 2,126k (dmt), down from 2,194k (dmt) on the prior quarter due mainly to a decision to reduce the level of export lump sales.


Total export sales for the six months ended 31 December 2015 were 4.21Mt. The business expects total export sales for FY16 to be approximately 9Mt.


Market


The Platts 62% Fe fines index price averaged US$47/dmt CFR for the quarter, down US$8/dmt on the average for the prior quarter. Prices for the four months to the end of October were less volatile than in recent periods, with the Platts 62% Fe index price generally in the ~US$50 - 60/dmt range, with an average price of US$54/dmt. Prices fell sharply in November and December to average US$43/dmt for the two months, reaching a low of US$38/dmt in mid December.


Arrium's average price was US$37/dmt CFR, down US$11/dmt on the prior quarter. In Australian dollars, Arrium's average price was $51/dmt CFR. On an FOB basis, the average price was US$26/dmt5 or A$35/dmt.


The significant fall in prices during the quarter led to Arrium's average price representing ~79% of the average Platts 62% Fe index price for the quarter, down from 87% for the prior quarter. This is largely due to the impact of M+1 customer pricing arrangements and a lower proportion of export lump sales and lower lump premiums. For customers with M+1 pricing, settlement is based on the average market price for the following month. This means the realised price will be below the average Platts index price for the quarter when prices have fallen during the period. Excluding this impact, Arrium's average price represents ~85% of the average Platts 62% Fe index price for the quarter. The impact of a lower proportion of export lump sales and lower lump premiums was ~5 percentage points.


For the six months ended 31 December 2015, Arrium's average price was A$58/dmt CFR (US$42/dmt). This represents ~83% of the average Platts index price for the half, and ~85% including the impact of M+1 pricing.


Costs6

The loaded cash cost for the quarter was A$36.1/wmt (~US$26/wmt), slightly above the previously reported targeted average for the year of ~A$35/wmt (~US$25/wmt). The average loaded cash cost for the quarter incorporates the impact of lower sales volumes, increased transhipping costs and a higher proportion of blended magnetite concentrate.

The total cash cost (CFR China) was A$57.8/dmt2 (~US$42/dmt), up A$0.4/dmt compared to the prior quarter. The business achieved reductions in overheads, freight and moisture levels during the quarter, largely offsetting the impact of lower sales volumes, increased transhipping costs and a higher proportion of magnetite concentrate. The reduction in overheads reflects the continued implementation of restructuring initiatives announced last June.


For the six months ended 31 December 2015, loaded cash costs were A$35.1/wmt, in line with the previously reported targeted average for FY16, and down from A$45.7/wmt for the prior half, a decrease of 23%. Total cash costs (CFR China) for the half were A$57.6/dmt, and include the first quarter impact of term freight COA allocations and higher moisture levels from initial ores at IKMA. This represents a decrease of 11% on the average total cash cost (CFR China) for the prior half of A$64.6/dmt.


There has been a substantial reduction in the business' capital spend during the half consistent with the business' focus on delivering its previously reported target for FY16 of ~A$6/t (US$4/t).


In response to the recent significant decline in iron ore prices, Arrium is working on options to further reduce costs and cash expenditures, including reviewing the business' mine plan.


Exploration


Drilling activity in the December quarter totalled 12,387m. The program included Reverse Circulation (RC) drilling (227 holes) and sonic drilling (107 holes). Three rigs were allocated to the Hematite stream on the Middleback Ranges projects, with a particular focus on low cost highly prospective targets close to surface and existing infrastructure along the Camel Hills-Cooyerdoo trend and in the Iron Baron area.


The Camel Hills-Cooyerdoo trend to the west of the Iron Baron Mining Area comprises a 25km long strike length of potential mineralisation that extends from Camel Hills in the south to Cooyerdoo in the north. Following the completion of a cultural heritage clearance survey, work commenced at the previously undrilled Sheoak Hills and Adder Hills prospects, where recent geological mapping and sampling identified outcropping ferruginous material.


At Sheoak Hills, which occurs 10km north west of Iron Baron, near-surface hematite mineralisation was intersected, with a second (limonite/goethite) zone at depth. Mineralisation varies in thickness from 10-20m and dips shallowly to the west. The main mineralised zone has been tested to date with 26 holes on eight drill sections over a strike length of 1km, and remains open in both directions and at depth.


At Adder Hills, which occurs 13km north west of Iron Baron and north along strike from Sheoak Hills, similar zones of hematite were intersected from surface with a second (limonite/goethite) zone at depth. Insufficient drilling has been completed to date to define the geometry of the mineralisation. The main mineralised zone has been tested to date with 10 holes on three drill sections over a strike length of

~900m, and remains open in both directions and at depth.


1 Includes mining, crushing, beneficiation, rail, road haulage and trans-shipping costs. Excludes capitalised costs (infrastructure, pre-stripping and mining licences) and depreciation and amortisation charges in respect of those costs, royalties, sales and marketing and corporate costs.

2 Includes loaded cash cost, royalties, sale and marketing and corporate costs, adjustments for moisture content and freight. Excludes capitalised costs (infrastructure, pre-stripping and mining licences) and depreciation and amortisation charges in respect of those costs.

3 Hematite export ore operations only. Excludes magnetite operations. Data has been adjusted to exclude hematite ore that is transferred internally to OneSteel Manufacturing as feed for the Whyalla blast furnace, based on actual blast furnace consumption. 4 Ore shipped reported on a dry metric tonne basis after adjusting for moisture.

5Arrium generally invoices customers on a CFR basis. FOB price is arrived at by deducting freight costs incurred by Arrium. Price difference compared to prior period can be due to price penalties, weighting of shipments in quarter and timing related to the determination of pricing for contract customers in addition to the change in the Platts Fe 62% Index price.

6US$ costs based on FX at US$0.72.


Map of Operations


Middleback Ranges

Arrium Limited issued this content on 2016-01-21 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 2016-01-21 00:19:43 UTC

Original Document: http://www.arrium.com/investor-centre/shareholder-information/~/media/Arrium Mining and Materials/Files/ASX Announcements/FY2016/Arrium Mining Quarterly Production Report 21 Jan 2016.pdf

share with twitter share with LinkedIn share with facebook
Latest news on ACN 004 410 833 LTD
2017South Korean consortium still interested in buying Arrium - Newlake source
RE
2017Liberty House submits revised bid for Australia's Arrium
RE
2017ARRIUM : Update on the Arrium Group of Companies
PU
2017ARRIUM : announces completion of Moly-Cop sale 4 January 2017
PU
2016ARRIUM : Quarterly update from the Deed Administrators 20 Dec 2016
PU
2016ARRIUM : of Companies Enter into Deeds of Company Arrangement 4 Nov 2016
PU
2016ARRIUM : announces sale of Moly Cop 4 November 2016
PU
2016ARRIUM : Resignation of Directors 24 October 2016
PU
2016ARRIUM : Update on the Administration of the Arrium Group of Companies 5 October..
PU
2016ARRIUM : Notice in Relation to Financial Reporting 14 September 2016
PU
More news
Sector and Competitors
1st jan.Capitalization (M$)
ACN 004 410 833 LTD0.00%0
BAOSHAN IRON & STEEL CO., LTD.-8.54%16 703
CITIC PACIFIC SPECIAL STEEL GROUP CO., LTD.37.30%13 353
CHINA STEEL CORPORATION-13.39%10 827
JSW STEEL LIMITED-28.38%6 178
EVRAZ PLC-25.97%5 510