· Net profit after tax attributable to owners of the Company for the year ended 31 December 2021 (“FY2021”) of A$81.9 million as compared to A$5.4 million for the year ended 31 December 2020 (“FY2020”). 

· Earnings Before Interest, Tax, Depreciation and Amortisation (“EBITDA”) of A$204.0 million for FY2021 compared with A$78.0 million for FY2020. 

· Basic and diluted earnings per ordinary share of the Group of 11.11 cents for FY2021 as compared to 0.73 cents FY2020. 

· Revenue from operating activities for FY2021 was A$1.04 billion, representing a 33% increase over FY2020. This increase was primarily attributed to higher total manganese ore and manganese alloys (mainly silicomanganese (“SiMn”)) volumes traded in FY2021, coupled with the increase in ferroalloy prices for the year. 

· Gross profit margin doubled to 26.4% in FY2021, up from 12.3% in FY2020. This was predominantly attributed to stronger ferroalloy prices. 

· The Group’s share of results from its associates for FY2021 was A$5.4 million.

· Total borrowings decreased from A$415.0 million as at 31 December 2020 to A$409.0 million as at 31 December 2021 which included repayments against the Sarawak Project Finance Loan of US$19.2 million (approximately equal to A$25.8 million) partially offset by an increase in the utilisation of trade facilities of approximately A$23.6 million for the purchase of ores, alloys and raw material inventories. As a result, total borrowings to equity ratio decreased from 0.89 times as at 31 December 2020 to 0.67 times as at 31 December 2021. Consolidated cash position of A$112.3 million (included cash collateral of A$16.2 million) as at 31 December 2021 as compared to A$63.0 million (included cash collateral of A$17.1 million) as at 31 December 2020. 

· Net cash generated from operating activities of A$94.2 million for FY2021.

· Net asset backing per ordinary share of the Group was 82.84 cents as at 31 December 2021 as compared to 63.56 cents per ordinary share as at 31 December 2020, representing a 30% (or 19.28 cents per ordinary share) year-on-year increase.

· With the Group having recorded a net profit after tax of A$109.3 million, the Board has resolved to declare a final dividend of A$0.02

 per share for FY2021. The Record Date for the dividend will be 8 April 2022 and the Payment Date will be 6 May 2022.

 

The Group recorded revenue of A$1.04 billion for the FY2021, which was a 33% increase from the A$784.6 million recorded for the FY2020. The increase in revenue was mainly attributed to higher total manganese ore and manganese alloys (mainly SiMn) volumes traded in FY2021, coupled with the increase in ferroalloy prices in FY2021. Despite the challenging global environment with the COVID-19 pandemic, there has been a strong global recovery since the beginning of 2021 with increased regional demand for manganese ores and ferroalloys. This has in turn translated to a corresponding increase in ferroalloy prices in FY2021, with rather significant increases recorded especially in the second half of FY 2021. 

 

With the shut-down of 4 furnaces since the middle of FY2020 due to border closures and local restrictions imposed on the hiring of new foreign workers due to the COVID-19 pandemic leaving only 12 furnaces operating for the whole of FY2021, the Group’s FeSi volumes traded from the Group’s 75% owned smelter in Sarawak decreased by approximately 34% in FY2021. The temporary shut-down of the smelter in Sarawak for about 1 month (i.e from end May 2021 to end June 2021) as a result of COVID-19 also contributed to this decrease. FeSi volumes traded in FY2021 were 117,514 tonnes, with a total revenue contribution of A$272.7 million (FY2020: 171,502 tonnes with a revenue contribution of A$250.2 million). 

 

Despite a 34% decrease in FeSi volumes traded in FY2021, the average transacted prices of FeSi for FY 2021 increased by approximately 59% (from A$1,459 per tonne for FY 2020 to A$2,321 per tonne for FY2021).

 

The decrease in FeSi volumes traded was offset by an increase in manganese alloys (mainly SiMn) volumes traded in FY2021 of approximately 24%. A total of 302,175 tonnes of manganese alloys were traded in FY2021 (with a revenue contribution of approximately A$474.4 million) as compared to 244,206 tonnes of manganese alloys traded in FY2020 (with a revenue contribution of approximately A$316.2 million).

 

Total manganese ore volumes traded (including from the Group’s wholly-owned Bootu Creek Manganese Mine (the “Mine”) and other third party ores) increased in FY2021 due to stronger global demand. Total manganese volumes traded increased by 402,012 tonnes (approximately 36%) to 1,513,757 tonnes, with a total revenue contribution of A$279.6 million in FY2021 (as compared to 1,111,745 tonnes with a total revenue contribution of A$212.4 million in FY2020). Manganese ore volumes traded from the Mine in FY 2021 increased by approximately 28% (by 170,962 tonnes) to 777,177 tonnes, with a revenue contribution of A$129.4 million (an increase of approximately 27%, as compared to a revenue contribution in FY 2020 of A$101.5 million). The increase in volumes traded was mainly due to the Australian subsidiary, OM (Manganese) Ltd (“OMM”) carried out mining and production activities for the whole of FY2021. However, for FY2020, mining and production efficiencies at the restart of mining activities in 2020, after the 4 months mining suspension following the Tourag accident, were slower with lower than budgeted yields. Other third party manganese ore volumes traded (including ores from South Africa) in FY2021 also increased by approximately 46% (by 231,050 tonnes) to 736,580 tonnes (as compared to 505,530 tonnes in FY2020). 

 

Revenue contributed from other third party manganese ores in FY2021 were A$150.2 million as compared to A$110.9 million in FY2020, an increase of 35%.

 

With an increase in both product volumes traded in FY2021 and price increases of FeSi and SiMn along with improved operational performance of OMM, the Group recorded an increased gross profit of approximately A$274.5 million in FY2021 (with a gross profit margin of approximately 26%) as compared to a gross profit of A$96.3 million in FY2020 (with a gross profit margin of approximately 12%).

 

Platts reported that prices of FeSi continued an upward trend since December 2020, closing at US$1,465 per metric tonne CIF Japan at the end of March 2021, and continued to rally to close at US$1,920 per metric tonne CIF Japan at the end of June 2021, and further surged by approximately 116.2% to close at US$4,150 per metric tonne CIF Japan at the end of September 2021. However, FeSi prices decreased from a high of US$4,150 to close at US$2,110 per metric tonne CIF Japan at the end of December 2021 mainly due to the easing of the energy crunch, as well as lower steel production in China during the quarter ended 31 December 2021.

 

The price of SiMn to Japan in FY2021 also followed the same trajectory as FeSi. SiMn prices closed at US$1,280 per metric tonne CIF Japan at the end of March 2021, continued to increase to close at US$1,545 and US$1,615 per metric tonne CIF Japan at the end of June 2021 and September 2021 respectively, before softening slightly to close at US$1,535 per metric tonne CIF Japan at the end of December 2021. 

 

As an indication, the index manganese ore prices (44% Mn published by Fastmarkets MB) also increased and closed at US$$5.60/dmtu CIF China at the end of December 2021, up from US$4.21/dmtu CIF China at the end of December 2020 and US$5.22/dmtu at the end of June 2021.

 

Total distribution costs increased by approximately 65% in FY2021, which was in line with the increase in the total volume of products traded and sold in FY2021. In addition, freight market rates increased significantly in FY2021 and remained elevated, and the heightened freight rate is expected to continue affecting sea borne trade globally into FY2022.