Vale Indonesia Tbk PT : PT Vale posts net loss but positive EBITDA in 1Q19

PT Vale posts net loss but positive EBITDA in 1Q19

Jakarta, April 24, 2019 - PT Vale Indonesia Tbk ("PT Vale" or the "Company", IDX Ticker: INCO) today announced its unaudited results for the first quarter of 2019 ("1Q19"). The Company recorded sales of US$126.4 million in the quarter. Sales in 1Q19 were 36% lower than in 4Q18 and 26% lower than 1Q18 due to a combination of lower production volumes and a lower average realized price in 1Q19.

"Production in the first quarter of 2019 was approximately 36% lower than production in 4Q18 due to a combination of planned maintenance activities related to the Larona Canal Relining and unplanned electric furnace 4 issues," said Nico Kanter, CEO and President Director of PT Vale. "These maintenance activities are crucial to improving operational efficiency and ensuring operational continuity. Due to furnace 4 issues, PT Vale's nickel in matte production was revised to 71,000 t - 73,000 t this year. Our operations team undertook several restorative measures on the furnace and is closely monitoring its condition to ensure its continued safe operation. Despite all these challenges in the quarter, the Company was still able to generate a positive adjusted EBITDA of US$4.0 million. We remain focused on optimizing production capacity, improving efficiencies and reducing costs."

PT Vale's cost of revenue fell by 21% from US$189.8 million in 4Q18 to US$149.7 million in 1Q19, aligned with significant lower production in 1Q19. However, the cost of revenue per metric ton of nickel in matte increased by 24% as around 50% of production costs are fixed costs. In order to control the cost, the Company continued implementing several initiatives as part of US$50 million cost reduction program and realized cost savings of US$3.7 million in 1Q19, on top of the US$10.8 million realized in 2018.

The following table provides details on PT Vale's High Sulphur Fuel Oil ("HSFO"), diesel and coal consumption in 1Q19, 4Q18 and 1Q18:

	1Q19	4Q18	1Q18
HSFO volume (barrels)	277,568	365,457	377,799
HSFO average price per barrel	US$71.42	US$75.47	US$60.36
Diesel volume (kilolitres)	28,329	19,542	19,367
Diesel average price per litre	US$0.59	US$0.71	US$0.58
Coal volume (t)	86,164	114,998	96,407
Coal average price per t (*)	US$149.52	US$169.94	US$144.09

(*) Price in DMT (Dry Metric Ton) and CFR (Cost & Freight) basis

The consumption of fuel and coal in 1Q19 was lower than 4Q18 due to lower production. On the price side, the fuel and coal prices in 1Q19 were lower compared to the previous quarter due to commercial negotiations that the procurement team undertook with suppliers, coupled with favorable trends in the commodity prices in the quarter.

[ 1 ]

PT Vale Indonesia Tbk

Jakarta: The Energy Building 31 st Floor SCBD Lot 11 A, Jl. Jend. Sudirman Kav 52-53, Jakarta 12190, Indonesia. T. (62) 21 524 9000 F. (62) 21 524 9020

Makassar: Jl. Somba Opu No. 281, Makassar 90001, Indonesia. T. (62) 411 873 731 F. (62) 411 856 157

Sorowako: Plant Site Sorowako, Kabupaten Luwu Timur 92984, South Sulawesi, Indonesia. T. (62) 21 524 9100 F (62) 21 524 9565

PT Vale disbursed approximately US$50.2 million in capital expenditures in 1Q19. The Company's cash and cash equivalents as of March 31, 2019 and December 31, 2018 were US$219.4 million and US$301.1 million, respectively. The lower cash balance in 2019 was driven primarily by lower sales as a result of lower production in 1Q19. PT Vale will continue to exercise prudent control of its spending to preserve cash.

The Company will maintain its focus on improving cost efficiency to sustain competitiveness in the long term without compromising the Company's foremost values: Life Matters Most and Prize Our Planet.

Readers are encouraged to review the Company's results. Operational achievements as well as the unaudited financial results are summarized on the following pages - all figures are in US$ except for nickel in matte production and deliveries which are in metric tons.

For further information, please contact: Bernardus Irmanto, Chief Financial [e-mail] or visit our website at www.vale.com/indonesia

[ 2 ]

PT Vale Indonesia Tbk

Jakarta: The Energy Building 31 st Floor SCBD Lot 11 A, Jl. Jend. Sudirman Kav 52-53, Jakarta 12190, Indonesia. T. (62) 21 524 9000 F. (62) 21 524 9020

Makassar: Jl. Somba Opu No. 281, Makassar 90001, Indonesia. T. (62) 411 873 731 F. (62) 411 856 157

Sorowako: Plant Site Sorowako, Kabupaten Luwu Timur 92984, South Sulawesi, Indonesia. T. (62) 21 524 9100 F (62) 21 524 9565

PT Vale Indonesia Tbk

Production and Financial Highlights

	1Q19	4Q18	1Q18
Nickel in matte production1	13,080	20,579	17,141
Nickel matte deliveries1	13,867	21,062	17,240
Average realized price2	9,117	9,368	9,887
Adjusted EBITDA3 *	4.0	56.85	43.2
Revenue3	126.4	197.3	170.5
(Loss)/Profit3	(20.2)	5.3	6.8
(Loss)/Earnings per share4	(0.0020)	0.0005	0.0007

1metric ton (t)

2US$ per t

3US$ million

4US$

5Excludes non-recurring expenses

*EBITDA defines profit or loss before interest, tax, depreciation and amortization. PT Vale uses the

term adjusted EBITDA to reflect exclusion of non-recurring expenses. Adjusted EBITDA should not be considered as a substitute for operational profit or as a better measure of liquidity than operational cash flow, which are calculated in accordance with Indonesian Financial Accounting Standards. PT Vale provides its adjusted EBITDA to give additional information about its capacity to pay debt, carry out investments and cover working capital needs.

[ 3 ]

PT Vale Indonesia Tbk

Jakarta: The Energy Building 31 st Floor SCBD Lot 11 A, Jl. Jend. Sudirman Kav 52-53, Jakarta 12190, Indonesia. T. (62) 21 524 9000 F. (62) 21 524 9020

Makassar: Jl. Somba Opu No. 281, Makassar 90001, Indonesia. T. (62) 411 873 731 F. (62) 411 856 157

Sorowako: Plant Site Sorowako, Kabupaten Luwu Timur 92984, South Sulawesi, Indonesia. T. (62) 21 524 9100 F (62) 21 524 9565

PT Vale Indonesia Tbk

Interim Statements of Profit or Loss and Other Comprehensive Income

(In thousands of US$ except basic earnings/(loss) per share)

		1Q19		4Q18		1Q18
Revenue		126,428	197,306		170,455
Cost of revenue		(149,703)	(189,759)		(154,186)
Gross (loss)/profit		(23,275)	7,547		16,269
Other income		1,730	5,641		-
Operating expenses		(3,070)	(2,822)		(2,838)
Other expenses		(2,841)		(3,000)		(3,265)
Operating (loss)/profit		(27,456)	7,366		10,166
Finance income		1,977	1,678		1,082
Finance costs		(1,394)		(1,510)		(1,872)
Net finance income/(cost)		583	168		(790)
(Loss)/profit before income tax		(26,873)	7,534		9,376
Income tax benefit/(expense)		6,711		(2,232)		(2,539)
(Loss)/profit for the period		(20,162)	5,302		6,837
Other comprehensive income
Items that will not be reclassified to
profit or loss:
− Changes resulting from actuarial
re-measurement of post-
employment benefit liabilities		(5,115)	4,907		224
− Income tax on other
comprehensive income		1,279		(1,227)		(56)
Total other comprehensive income		(3,836)	3,680		168
Total comprehensive (loss)/income
for the period		(23,998)	8,982		7,005
(Loss)/earning per share
- Basic and diluted (in full amount of
US Dollars)		(0.0020)		0.0005		0.0061

[ 4 ]

PT Vale Indonesia Tbk

Jakarta: The Energy Building 31 st Floor SCBD Lot 11 A, Jl. Jend. Sudirman Kav 52-53, Jakarta 12190, Indonesia. T. (62) 21 524 9000 F. (62) 21 524 9020

Makassar: Jl. Somba Opu No. 281, Makassar 90001, Indonesia. T. (62) 411 873 731 F. (62) 411 856 157

Sorowako: Plant Site Sorowako, Kabupaten Luwu Timur 92984, South Sulawesi, Indonesia. T. (62) 21 524 9100 F (62) 21 524 9565

PT Vale Indonesia Tbk

Interim Statements of Financial Position

(In thousands of US$)

		March 31, 2019		December 31,		March 31, 2018
			2018
		(Unaudited)		(Audited)		(Unaudited)
Assets
Cash and cash equivalents		219,381	301,153		177,912
Restricted cash		-	15,607		3,962
Trade receivables - Related parties		82,341	124,248		152,478
Inventories, net		148,642	131,779		128,126
Prepaid taxes - Corporate income tax		9,250	9,250		24,895
- Other taxes		45,728	41,548		52,868
Prepayments and advances		2,735	4,887		4,069
Other current financial assets		2,255		2,526		2,905
Total current assets		510,332		630,998		547,215
Restricted cash		23,417	14,345		14,345
Prepaid taxes - Corporate income tax		33,876	-		9,863
- Other taxes		117,762	116,281		109,205
Non-trade receivables - Related parties		10	18		52
Fixed assets, net		1,448,061	1,434,510		1,469,750
Other non-current financial assets		5,898		6,300		7,085
Total non-current assets		1,629,024		1,571,454		1,610,300
Total assets		2,139,356	2,202,452		2,157,515
Liabilities and Equity
Trade payables - Related parties		1,189	1,620		2,114
- Third parties		77,564	89,561		45,850
Accruals		24,939	25,599		12,501
Short-term employee benefit liabilities		8,856	15,823		9,963
Taxes payable		3,718	2,900		5,820
Current portion of long-term bank
borrowings		18,108	36,519		36,879
Share-based payment liabilities		724	2,042		1,698
Other current financial liabilities		1,931		1,276		3,369
Total current liabilities		137,029		175,340		118,194
Long-term bank borrowings		-	-		17,654
Long-termpost-employment benefit
liabilities		15,438	14,878		19,311
Deferred tax liabilities, net		83,963	90,674		103,352
Provision for asset retirement		43,197	37,833		72,632
Total non-current
liabilities		142,598		143,385		212,949
Total liabilities		279,627		318,725		331,143
Equity		1,859,729		1,883,727		1,826,372
Total liabilities and equity		2,139,356		2,202,452		2,157,515

[ 5 ]

PT Vale Indonesia Tbk

Jakarta: The Energy Building 31 st Floor SCBD Lot 11 A, Jl. Jend. Sudirman Kav 52-53, Jakarta 12190, Indonesia. T. (62) 21 524 9000 F. (62) 21 524 9020

Makassar: Jl. Somba Opu No. 281, Makassar 90001, Indonesia. T. (62) 411 873 731 F. (62) 411 856 157

Sorowako: Plant Site Sorowako, Kabupaten Luwu Timur 92984, South Sulawesi, Indonesia. T. (62) 21 524 9100 F (62) 21 524 9565