MMG issues profit warning as lower metals prices trigger $640-800m impairment

MMG’s full-year financial results will be significantly affected by a planned $640-800 million impairment against the fair value of some of its mining assets, the company warned on Tuesday December 8.

The writedown comes in response to the substantial declines in lead, zinc and copper prices since the start of the year, as well as changes to mine development plans, production profiles and acquisition goodwill, the Hong Kong-listed miner told investors after the close of trading on Tuesday.

The assets that have been written down are the Dugald River zinc and lead mine in Queensland, Australia, and the Kinsevere copper mine in the Democratic Republic of Congo, as well as the Izok Corridor development-stage projects in Canada, the miner said.

“The company wishes to emphasise that the impairment is an accounting-related adjustment and a non-cash item, and it will therefore not have any impact on the cash flow of the company,” MMG said.

The Las Bambas copper mine in Peru has not been written down, a statement from the company indicated. MMG bought Las Bambas from Glencore following the miner-trader’s acquisition of Xstrata. 

Las Bambas remains on track to achieve first production in the first quarter of next year, and has recently produced concentrates on a trial basis in order to test logistics and handling ahead of the start-up of the mine, it said in a progress update on Tuesday.

The capex forecast for the Las Bambas project remains within the previously advised range of $1.9-2.4 billion from January 1, 2015, MMG told investors.

Mark Burton 
mburton@metalbulletin.com
Twitter: @mburtonmb