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Nyrstar (0JNH)

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Wednesday 27 July, 2011

Nyrstar

Nyrstar announces 2011 Half Year Results






News Release
Regulated information

27 July 2011

HIGHLIGHTS

Solid Financial Performance

  * Underlying EBITDA of €123 million, a 8% increase from H2 2010 (€114 million)
  * Successfully completed rights offering for €490 million in March 2011
  * Successfully closed a public offering of bonds for €525 million in May 2011

Record smelting output with continued growth in mining production

  * Record half year zinc metal production of 561,000 tonnes from the smelting
    segment
  * Contribution of €29 million from "unlocking untapped value" initiatives in
    the smelting segment through the identification of recoverable silver
  * Continued progress in mining ramp-up with zinc in concentrate production
    (including deliveries from the Talvivaara streaming agreement) up 58% in H1
    2011 compared to H2 2010

Actively delivering on our upstream integration strategy

  * Successfully completed the acquisition of the Campo Morado mining operation
    in Mexico for approximately €296 million in January 2011
  * Announced binding agreement to acquire Breakwater Resources for a total
    offer value of approximately €442 million in June 2011
  * Zinc integration increased from 31% to 43% based on full production of
    existing assets and including Breakwater Resources
  * Continue to actively explore opportunities to achieve medium-term zinc
    integration target of 50%
  * Extended Commodity Grade Off-take Agreement with the Glencore Group

Commenting  on the first half results,  Roland Junck, Chief Executive Officer of
Nyrstar, said,

"In  the first half of 2011 we have continued  to grow in terms of our financial
results,  our scale  of operations,  and our  level of  ambition. We achieved an
underlying  EBITDA of €123 million, with  solid contributions of €26 million and
€117 million from our mining and smelting segments respectively.

The  zinc price,  as well  as the  prices for  a number  of our key by-products,
whilst  remaining volatile improved on average between H2 2010 and H1 2011 in US
dollar  terms, and to a lesser extent in  Euro terms due to the weakening of the
US dollar against the Euro currency during this period.

We   are  continuing  to  aggressively  deliver  on  our  strategy  of  upstream
integration. With the expected closing of the Breakwater acquisition in Q3 2011
and  full ramp-up of our mining operations expected by the end of 2012, our zinc
integration  level will  reach 43% by  such time,  which would  make us a top 5
global  zinc mining company  based on 2010 global  production according to Brook
Hunt.  The Breakwater  acquisition is  in line  with our strategy to selectively
pursue  opportunities in  mining, and  presents an  exciting opportunity  to get
within striking distance of our medium-term zinc integration target of 50%.

To  support  our  upstream  integration  strategy,  including the acquisition of
Breakwater,  and to further diversify our  funding sources, we were delighted to
successfully  implement  two  major  financing  initiatives in H1 2011. Both the
rights  offering for €490 million and the  public bond offering for €525 million
were  not only strongly supported  by our shareholders and  the market, but also
demonstrate  clear support  for Nyrstar's  strategy and  our ability  to deliver
value accretive transactions.

We  remain confident in the fundamental medium to long term outlook for the zinc
market  and believe that Nyrstar, as the world's largest zinc metal producer and
through  its continued upstream integration, is  well positioned to leverage off
these strong zinc market fundamentals.

During the first half, we re-entered the BEL 20 Index and are also now included
in the Eurostoxx 600 index. Our inclusion in both of those indices validates our
strategy  for growth and  our performance, along  with the importance of Nyrstar
within  the  Belgian  and  European  markets.  We  are  working hard to continue
delivering  on our strategic transformation and are thankful to our shareholders
for their continued support."

COMMENT

The  Company delivered a solid financial performance in H1 2011, with underlying
EBITDA  of €123 million, growing by 8% compared to €114 million in H2 2010. This
consisted of a €26 million and €117 million contribution, respectively, from the
mining  and smelting segments, with €(20)  million in the other and eliminations
segment.

The  zinc price, whilst volatile, rose 7% to  an average of US$2,323/tonne in H1
2011, from  an  average  of  US$2,163/tonne  in  H2 2010. However, the Company's
financial  performance was  negatively impacted  by the  depreciation of  the US
Dollar against the Euro, with the US dollar falling by 5% to an average of 1.40
in  H1 2011. As such, the Euro  denominated zinc price increased only marginally
by 2% in H1 2011. Other metal prices also increased during H1 2011 and were also
negatively impacted by the weakening of the US dollar.

In  H1 2011, mining underlying EBITDA per tonne[1] was €324 compared to H2 2010
at  €338.   This  result  achieved  notwithstandning  the  higher  C1 cash costs
associated with the ramp-up phase, highlights the higher profitability of mining
as  compared to smelting  (the underlying EBITDA  per tonne[2] of which remained
relatively  flat  at  €209  (up  from  €207  in H2 2010)). The Company expects a
further  improvement  in  mining  underlying  EBITDA  per  tonne  as  its mining
operations  reach  full  production  (as  expected  by  the end of 2012), with a
consequent reduction in C1 cash costs. The average C1 cash cost[3] for Nyrstar's
zinc  mines (including  the Talvivaara  zinc stream)  was US$1,515  per tonne of
payable  zinc in H1 2011 and is expected  to continually improve over the course
of 2011 and 2012 to our stated target of less than $1,000 per tonne.

Zinc   in  concentrate  production  from  Nyrstar's  mining  segment  (including
deliveries  under  the  Talvivaara  streaming  agreement) was 79kt in H1 2011, a
substantial  58% increase  on  H2  2010, but  less than the previously published
guidance of 95kt.  The shortfall in production was mainly caused by the delivery
of   lower   volumes  than  anticipated  from  Talvivaara,  temporary  equipment
availability  issues at  East Tennessee  Mines in  Q2 2011 and reduced mill head
grades[4] at some of the mining operations.

Nyrstar's  mining  operations  fall  into  three  categories. The first category
consists of mines operated by Nyrstar which were acquired in a state of care and
maintenance,  or early  ramp-up stage  (e.g. the  Coricancha and Puccarajo mines
(Peru)  and the Tennessee Mines (US)). Despite  a number of challenges that have
been  encountered  which  are  normal  in  a ramp-up phase, substantial progress
continued  to be made during H1 2011 towards  the stated goal of full production
by  the end of 2012. The  second category consists of  mines operated by Nyrstar
which  were acquired at an  advanced stage of production  (e.g. the Campo Morado
mine  (Mexico), and Contonga mine (Peru)). Production performance of these mines
during  H1 2011 was in line with the Company's expectations. For these first two
categories,  the volume of ore milled in H1 2011 increased significantly by 42%
from  H2 2010 (with  Middle Tennessee  increasing 58%). Recovery  rates remained
stable,   however,   mill  head  grades  in  a  number  of  instances  decreased
(particularly  in the latter half of H1 2011).  The decrease in head grade is in
part  due to the lack of life-of-mine plans  and to a lack of investment in mine
planning  by  previous  mine  owners.  During  H1 2011 Nyrstar has been actively
delineating  the reserves  and resources  of these  mines and  developing robust
life-of-mine  plans that  will be  implemented over  the next  12 months and are
expected  to deliver further  growth in production  and earnings consistent with
previous  guidance. The third category consists  of mines which are not operated
by  Nyrstar, namely the Talvivaara streaming agreement. Whilst volumes delivered
under  the streaming agreement during the half year were not as high as guidance
previously  provided by  Talvivaara, Nyrstar  remains confident  that Talvivaara
will  continue to increase its delivery  volumes consistent with its guidance to
reach full production by the end of 2012.

As  a result  of the  significant progress  made in  Nyrstar's mining operations
during  H1 2011 and the various initiatives  that have been implemented, Nyrstar
maintains  its  full  year  zinc  in  concentrate production guidance of 215kt.
Nyrstar  expects to provide an updated production guidance for full year 2011 as
part  of its Q3  Interim Management Statement  following the expected closing of
the Breakwater acquisition.

Nyrstar's  mines  also  produced  significant  volumes  of other metals that are
becoming  an  increasingly  valuable  contributor  to  mining  segment earnings.
Approximately  13,300 troy ounces of gold  in concentrate, 1,273,000 troy ounces
of  silver in  concentrate[5], 1,000 tonnes  of lead  in concentrate  and 2,800
tonnes of copper in concentrate were produced in H1 2011.

In  H1 2011, Nyrstar's  smelting segment  achieved record  half year  zinc metal
production  of approximately 561,000 tonnes. Production in H1 2011 was 2% higher
than  in H2 2010 (the previous record half year), primarily due to the increased
production  at the Balen  smelter (Belgium) and  the Hobart smelter (Australia).
Lead  production at the Port Pirie multi-metals smelter (Australia) demonstrated
continued  improvement  during  H1  2011 with  production up 11% to 102kt due to
sustained improvements of the sinter plant and blast furnace operations.

As  part of  the Company's  strategic plan,  Nyrstar2020, both  the smelting and
mining segments have started to deliver a number of tangible financial benefits.
In   addition  to  "upstream  integration",  the  Nyrstar2020  plan  focuses  on
"excellence  in Nyrstar's  existing business",  aimed at  creating an externally
focused business driven by commercial, operational and financial excellence; and
"unlocking  untapped value" by exploring  the opportunities available to Nyrstar
to  grow and strengthen its business, principally by exploring untapped value in
Nyrstar's polymetallic raw materials and by-product streams.

Nyrstar  has  today  announced  that  the  expiry  time  of the offer to acquire
Breakwater  Resources Ltd. has  been extended from  29 July 2011 until 25 August
2011. The  extension of the offer is due  to the regulatory approval process and
related  review periods of the requisite  competition authority filings, and the
approval  required under  the Investment  Canada Act.  All submissions have been
made  and are being reviewed by the  relevant  authorities in the normal course.
Nyrstar  and  Breakwater  are  working  closely  with  each  of  the  regulatory
authorities  and no issues have been raised.  Both Nyrstar and Breakwater expect
that the requisite approvals will be received prior to 25 August 2011. All other
terms  and conditions  of the  offer described  in Nyrstar's  offer and circular
dated 23 June 2011 remain the same.

CONFERENCE CALL

Management  will present these results to the investment community on 27 July at
08:00 British Summer Time, 09:00 Central European Time. The presentation will be
webcast live on the Nyrstar website, www.nyrstar.com, and will also be available
in archive.

[1] Mining segment underlying EBITDA per tonne of zinc in concentrate produced.
[2] Smelting segment underlying EBITDA per tonne of zinc metal produced.
[3] C1 cash costs are defined by Brook Hunt as: the costs of mining, milling and
concentrating, on-site administration and general expenses, property and
production royalties not related to revenues or profits, metal concentrate
treatment charges, and freight and marketing costs less the net value of by-
product credits.
[4] Milled head grade is metal content of mined ore going into a mill for
processing.
[5] 75% of the silver produced by Campo Morado is subject to a streaming
agreement with Silver Wheaton Corporation whereby only $3.90 per oz is payable.


Contacts

Investors

Anthony Simms
Manager, Investor Relations
T: +41 44 745 8157
M: +41 79 722 2152
[email protected]

Media

Kate Dinon
Group Manager,
Corporate Communications
T: +41 44 745 8154
M: +41 79 722 84 66
[email protected]

Geert Lambrechts
Manager,
Corporate Communications
T: +32 14 449 646
M: +32 473 637 892
[email protected]

The full press release can be downloaded from the following link:




Press Release (English): 


http://hugin.info/138416/R/1533698/467274.pdf

Press Release (Dutch): 


http://hugin.info/138416/R/1533698/467275.pdf

Press Release (French): 


http://hugin.info/138416/R/1533698/467276.pdf




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(ii) they are solely responsible for the content, accuracy and 
     originality of the information contained therein. 
    
Source: Nyrstar via Thomson Reuters ONE

[HUG#1533698] 
  



                                                                                       

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