Solway Investment Group Announces Its Full Year 2018 Financial Results
- In 2018, Solway had consolidated revenues of USD 536 million;- Group EBITDA was USD 81 million with an EBITDA margin of 15%;- Production costs increased to USD 457 million in 2018, up from USD 363 million in 2017 due to an 18% increase in production in Pronico (Guatemala) and maintenance works in PFP (Ukraine);- The Group had total assets of USD 1.07 billion at the end of 2018;- Based on an adequate leverage ratio (Net Debt to EBITDA of 0.06x for the full year 2018), Solway continues to be an attractive potential borrower on the global financial market.
ZUG, Switzerland, July 16, 2019 /PRNewswire/ -- Despite a volatile commodities market and unstable global steel production volumes, Solway Group continues to develop and optimize its nickel production structure at its production facilities in Guatemala and Ukraine. The company is primarily focused on reducing the cost of nickel production and increasing production volumes. Looking forward, the Group will also be developing a new mine, Borov Dol, in Macedonia, as well as identifying exploration opportunities for new gold deposits at Kurilgeo in Russia.
The Fenix Project, Guatemala
In 2018, 2.618 million metric tons of wet nickel ore were mined in Guatemala. Pronico delivered 14,688 metric tons of nickel in ferronickel in 2018 compared to the 12,416 metric tons it produced in 2017. Total capital expenditures amounted to USD 32 million. This figure includes purchases of mine equipment and coal boilers, construction of an SPLC system, and exploration works.
Considerable management and shareholder effort was invested in acquiring equipment for electricity generation and ensuring stability of production. The Group also continues investing in different processes to increase both production volumes and the quality of the goods produced. The Group remains absolutely committed to the highest standards of health and safety, environmental protection, sustainability, and local community development.
Pobuzhsky Ferronickel Plant (PFP), Ukraine
In 2018, PFP processed 1.431 million metric tons of wet ore into 15,807 tons of nickel in ferronickel.
In 2018, the investment plan was primarily focused on supporting production volumes and increasing the efficiency of the gas cleaning units. Capital expenditures to repair the primary technical equipment equaled USD 2.7 million. Investments to support production capacity -- acquisition of equipment, technical equipment, construction, etc.-- were USD 0.6 million in 2018. In 2017, the plant launched a long-term project for the reconstruction of the third stage of the gas treatment facility. The first stage of construction was completed in 2018 and the second stage of this project will be completed without stopping the main production facility. Total expenditures (the cost of equipment purchased and works performed) equaled USD 1.7 million. After the program is completed, the level of emissions cleaned will increase to 99.9%.
Kurilgeo Project, Russia
In 2018, Kurilgeo produced 42,600 oz. of gold, a 37% increase compared to 2017, and 123,988 oz. of silver, a 7% increase compared to the previous year.
Ore production in 2018 reached 760,500 tons, a 28% increase compared to 2017. Mining of rock mass increased by 2.4% compared to the previous year to reach 2.8 million tons. Crushing volumes and stowage of ore increased by 1.4 times in 2018 compared to 2017. The growth in these indicators occurred as a result of changes made to the working schedules at the Aina, Osma and Elina sites.
Low operating costs ensured a high operating margin, which is consistent with the approved business plan. Kurilgeo operations contributed USD 55.1 million in sales, with an EBITDA margin of 49% in 2018. The company's capital expenditures of USD 1.9 million were primarily directed towards exploratory works, purchases of mining machinery and equipment, and construction of new assets.
The Group successfully executed an early repayment of Kurilgeo's debts to UniCredit Bank and Rosbank, meeting all of the requirements contained in the respective credit agreements.
Buchim Copper Mine, North Macedonia
In 2018, Buchim produced 33,795 tons of dry copper concentrate, containing 6.950 tons of copper, 24,659 oz. of gold, and 32,761 oz. of silver, and produced 768 tons of cathode copper of 99.99% quality.
Steady improvement of Buchim's operational efficiency ensured sustainable production. This resulted in the historically stable performance of the Group's Cu segment, with its 2018 EBITDA margin of 46%. The Group's management is beginning to develop the Borov Dol project which will extend the Buchim mine's industrial operations for up to 10 years, and will be beneficial for the local communities in three municipalities - Konche, Shtip and Radovish. Funds were raised for this purpose in early 2019, including a EUR 25 million, 7-year loan from a local commercial bank (Komercijalna Banka AD Skopje).
In 2018, Buchim invested USD 1 million in purchases of equipment, infrastructure development, occupational health and safety, and environmental protection measures.
Facility maintenance and repair expenses totaled USD 5.565 million in 2018. As in previous years, most of the funds were spent on repairs and maintenance of mining and transportation equipment. From the total amount, USD 4.024 million was used for the quarry, USD 1.4 million was spent on the flotation unit, and USD 217,600 was invested in the SX/EW plant.
The total investment of USD 979,640 was used for the needs of the production units: the surface pit/quarry, flotation unit, SX/EW plant and the auxiliary units.
Aquila Project/Other Satellite Projects, Indonesia
Nickel DSO (Direct Shipment Operations)
In 2018, according to the program developed in 2017 and permit requests submitted, Solway Group successfully obtained an export permit for almost 2 million wmt of nickel ore. Since the second half of 2018, the Group has been successfully exporting nickel ore from Indonesia from an existing mining operation located in Morowali, Central Sulawesi (Bahomoahi deposit).
Solway Group is further investigating implementation of processing solutions for the remaining mining operations, such as PT Bumi Inti Sulawesi (Sorowalio Project) and PT Bumi Konawe Minerina (Asera Project).
Aquila Cobalt Nickel Projects (Morowali & Halmahera)
In 2018, Solway Group managed to maintain and progress all the necessary permits for all of the nickel assets in the country, including maintaining an operational license for a world-class nickel-cobalt deposit in Indonesia for the next 20-40 years.
Based on the successful internal review of the PT Sulawesi Resources (Bahomoahi deposit) in 2017 and studies undertaken, the Group continued in 2018 with related studies and metallurgical testwork of hydrometallurgical options for processing the ores, which include atmospheric leaching and HPAL to produce nickel & cobalt MSP and/or nickel and cobalt sulphates. Both of these materials are currently highly valuable due to global growth forecasts for the electric vehicle market.
Production is expected to begin in early 2021, with an overall target to produce around 30,000 tons of MSP/MHP nickel material.
Papua New Guinea
Solway Group successfully maintained all of its licenses in PNG in 2018. The Group plans further detailed exploration of current and new assets in PNG in 2019. All of the exploration programs undertaken in PNG are fully supported by the local communities.
Chromite Deposit in the Philippines
In 2018, the Group's project in the Philippines operated smoothly and produced an average of 6,000 tons/month of chromite concentrate with a minimum quality index of 47% Cr2O3. During this period, construction of new lines was continued and the project is currently using one of the four new lines. Three new lines will be launched in the near future. Total capacity of production is expected to reach 10,000 tons/month. In order to upgrade the potential of the plants, the company is dredging the water pond and expanding the tailings area.
At present, the project owns 60 units of heavy equipment: excavators, dump trucks, loaders, bulldozers, and graders. An additional two long arms were purchased during 2018 with leasing financing, and an additional four excavators were leased with the option to purchase. This vehicle fleet is enough to support the Group's production volumes.
Environmental protection, occupational health and safety - CSR in 2018
Solway's first and primary responsibility is to promote and protect the health, safety, and well-being of all of its employees, contract personnel, and members of Solway's host communities.
To embrace integrity, transparency and cooperation, we have implemented internationally recognized standards of environmental and social performance: the Equator Principles; IFC Performance Standards; ISO 14001, 9001, 4500; Voluntary Principles on Security and Human Rights. The integrity of our implementation was assessed by independent consultancies including Golder Associates, ERM and others. We are also currently working on implementing the UN Sustainable Development Goals (SDG) and Global Reporting Initiative (GRI).
For full press release please visit: https://solwaygroup.com/2019/07/15/solway-investment-group-announces-its-full-year-2018-financial-results/
In case of further questions or interview requests, please contact Solway Investment Group's press office at: +41-41-740-04-00 or [email protected].
SOURCE Solway Investment Group
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