COMPAÑÍA MINERA AUTLÁN, S.A.B. DE C.V. Compañía Minera Autlán, S.A.B. de C.V.
2020 Fourth Quarter Report
San Pedro Garza García, N.L., Mexico, February 24th, 2021.- Compañía Minera Autlán, S.A.B. de C.V. and Subsidiaries (Autlán o the Company) presents its fourth quarter 2020 (4Q20) financial and operating results in accordance with the International Financial Reporting Standards (IFRS). Figures may vary due to rounding.
Results and Relevant Events
• Increase in EBITDA versus 4Q19
• Improved quarterly and cumulative EBITDA/Sales margin
• Ferroalloys and manganese nodules exports reached new record
• 22% diversification in annual sales for non-steel markets
• Issuance of unsecured bonds
• Financial strength and net debt level of 2.2x
• Safety record with the lowest incident rate
• COVID-19 Health Security Distinction by the IMSS1
• Later Event: Reopening of the Gómez Palacio Plant in February 2021
Acquisition of Cegasa Portable Energy (Autlán EMD)
As part of the strategic plan, in February 2020 Autlán acquired Cegasa Portable Energy (Cegasa), a company located in the Basque Country, an autonomous community of Spain. With more than 60 years of experience and a stable generation of EBITDA, it is recognized as the second largest producer of Electrolytic Manganese Dioxide (EMD) in the European Union. EMD is a key input in the production of alkaline batteries. This acquisition contributes to our growth in the battery industry and diversification of sources of income towards non-steel related operations. Furthermore, it represents the first step towards the geographical expansion of operations outside of Mexico serving the European Union market. The details of this transaction were duly disclosed in the Press Release dated February 10, 2020.
1 Mexican Healthcare System
Cegasa, now Autlán EMD, is now a new division within the company's operating structure:
Operating Structure
Autlán
Industry and Operations
Autlán Manganese and EMD
During 2020, the steel and manganese industry were affected by the economic slowdown that began in 2019, a situation intensified by the effects of the COVID-19 pandemic.
Globally, crude steel production has shown a significant recovery in the second half of 2020. After a 6% decrease in the first semester compared to the same period in 2019, it closed the year with an annual contraction of only 1%. In contrast, derived from the importance of the Asian market, the steel production in China showed increases of around 5% in annual terms in 2020. In Mexico, steel production decreased by 9% as a result of the country's economic slowdown.
Prices in China for manganese ore showed an annual decrease of 17%. Despite high inventory levels registered in Chinese ports at the end of the year, the outlook of more demand has driven the gradual recovery of international prices in December 2020. Therefore, prices of ferroalloys registered annual decreases of 10%, 16% and 18% for High Carbon Ferromanganese, Silicomanganese and Medium Carbon Ferromanganese, respectively. The increased demand for these alloys in the US market along with a limited supply in December has caused a rapid rise during the end of 2020 and early 2021.
The EMD market continues to show stability in consumption within the European Union with a positive performance of its price, in line with the latest trends in manganese mineral.
Autlán Energy
This quarter highlights as our best in terms of energy generation for 2020. The Atexcaco Hydroelectric Power Plant was able to satisfy 26% of the total electrical energy required by our ferroalloy plants This represented cost savings of $1.6 million dollars.
When compared against 2019, generation decreased by 2% due to the low rainfall in the region. Despite this, savings of $5.9 million dollars were achieved during 2020.
In addition, the Power Purchase Agreements (PPA's) with different private providers represented 15% of energy consumption with savings over $340 thousand dollars during the quarter and $1.3 million dollars in the year.
Autlán Metallorum
Regarding precious metals, in an evident contrast to the global economic crisis caused by the COVID-19 pandemic, 2020 was a year with attractive returns. The monetary policy decision by the FED to maintain interest rates close to 0%, as well as the measures to counteract the effects of COVID-19 including halts and restrictions that have affected the capital market, benefited the demand for gold as a strategic investment asset.
The performance of the gold price was mainly favorable throughout the year with a 25% yield, showing some stability during 4Q20.
The Autlán Metallorum Division maintained efforts to preserve the health and safety of employees and operations. The order made by the Mexican government which stated that the gold industry was not considered an essential activity at the time, caused a halt in this Division during the second quarter of 2020 that affected the volume deposited in our leaching pads. In addition, there were some operational problems, a lower recovery and geological challenges when finding a greater dilution than estimated. This decreased the production of this mineral in 2020. As a response, efforts on geology and mining planning increased in order to recover some level of production.
The drop in sales volume in the fourth quarter was partially offset by the growth in the average gold price compared to the same period in 2019.
Relevant figures
Adoption of the Dollar as Functional and Reporting Currency
According to the International Financial Reporting Standards (IFRS), the functional currency must be determined depending on the currency of the economic environment in which the issuer and its subsidiaries predominantly operate, which in the case of Autlán since 2016 is the US dollar. Due to this situation, the unaudited figures reported here have been prepared in that currency. The consolidated information of 2020 includes Autlán EMD as of February 2020.
Earnings Report for the fourth quarter 2020
Income Statement for the fourth quarter of 2020
(figures in thousands of dollars, unless otherwise specified)
(according to IFRS)
Accumulated Figures 20202 2019 | Quarterly Figures 4Q20 3Q20 2Q20 1Q201 4Q19 |
EMD (thousand MT) Cost of sales Gross profit 11.0 -283,884 62,355 NA -341,905 78,223
Net profit -15,287 -12,193 | 82,452 79,349 84,217
2.9 2.9 3.1 -73,203 -63,453 -62,870 9,249 15,896 21,347 2.0 -84,358 15,864 NA -81,168 9,868 -14,644 -11,460 -13,143
|
* When consolidating results, Autlán Energy sales to our own manganese ferroalloy plants are eliminated.
In the midst of a challenging environment, the company shows its operational flexibility and quick response to adapt to market conditions by maintaining and improving its margins even with the decline in sales, exhibiting stable results and a strong financial structure.
2 Consolidated figures include Autlán EMD as of February 2020.
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Compañia Minera Autlan SA de CV published this content on 24 March 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 March 2021 19:18:04 UTC.
