29METALS LIMITED 23 February 2022
2021 Full Year Financial Results
only29Metals Limited ('29Metals' or the 'Company') today released its Appendix 4E and Annual Financial Report for the year ended 31 December 2021 (the '2021 Financial Results') for 29Metals and its controlled entities (the 'Group'). This release presents a summary of information reported in the 2021 Financial Results and should be read in conjunction with the 2021 Financial Results separately released today.
Key results
Statutory1
useThe results reported today comprise the statutory results for the Golden Grove Group2 for the six months to 30 June 2021 combined with the results for the post IPO 29Metals Group for the six months ended 31 December 2021.
personal
No dividend at the full year.
The Board is committed to delivering sustainable returns to shareholders and will closely consider dividends at the half year, taking into account operating and financial performance, and the Group's capital management requirements and growth investment priorities.
Pro forma
For presentation purposes, the pro forma financial information is compared to the pro forma forecast financial information
('PPF') set out in the 29Metals Prospectus dated 21 June 2021 (a copy of which was released to the ASX on 2 July 2021) (the '29Metals Prospectus').
For
Pro forma results are included to provide investors with an understanding of the performance of the Group for the full year (i.e., as if the restructure and IPO transactions in 2021 occurred before 1 January 2021). Pro forma results are non-IFRS financial information and have not been audited. Refer to page 2 for important information regarding the use of non-IFRS financial information in this release, including the basis of preparation of pro forma financial information.
- Statutory financial results are reported against the financial results of the Golden Grove Group for the year ended 31 December 2020 (the prior corresponding period). Refer to page 3 for further information regarding the basis of preparation of the statutory financial results.
- The Golden Grove Group comprises Golden Grove, LP, Golden Grove Holdings (No.2) Pty Ltd, Golden Grove Holdings (No.3) Pty Ltd and Golden Grove Operations Pty Ltd.
- EBITDA, Adjusted NPAT, Drawn Debt and Net Drawn Debt are non-IFRS financial information metrics. Refer to page 2 for important information regarding the use of non-IFRS financial information in this release.
- Cash excludes cash held as rental security deposit and EMR Capital Investors' IPO proceeds retained by 29Metals under the "Cash Backed Indemnity" arrangements described in section 10.6.12.3 of the Prospectus.
1
For personal use only
2021 | Full Year Financial Results
Commenting on the financial results Managing Director & Chief Executive Officer, Peter Albert, said:
"29Metals is extremely pleased to present its inaugural full year financial results, capping off a landmark year for the Company following the successful completion of our IPO seven short months ago, one of the largest base-metals IPOs for more than a decade, bringing together two high quality, long-life producing assets and a portfolio of organic growth opportunities.
The financial results announced today underline the potential of 29Metals with our financial performance exceeding Prospectus forecasts for revenue and EBITDA, reflecting strong operating performance, particularly in the second half, supported by strong commodity prices.
The restructure and IPO transactions, combined with the financial results for the year, provide us with the platform to execute our organic growth strategy.
29Metals is well positioned to capitalise on the positive outlook for the commodities we produce, particularly copper and zinc, and we are focused on executing our plans to deliver sustainable growth in shareholder value in the coming years.
We ended the year with a strong cash balance and low net drawn debt position. As part of our ongoing commitment to deliver shareholder value, the Board will closely consider dividends at the half-year, having regard for operating and financial performance and the capital requirements to advance the Company's growth ambitions, with a number of important decisions looming in relation to our organic growth opportunities."
Important information regarding non-IFRS financial information
Non-IFRS financial information metrics used in this release
This release contains certain information, such as C1 Costs, AISC, EBITDA, Adjusted NPAT, Adjusted EPS, Drawn Debt, Net Drawn Debt and Cu-eq, that is not recognised under Australian Accounting Standards and is classified as 'non-IFRS financial information' under ASIC Regulatory Guide 230 (Disclosing non-IFRS financial information).
Non-IFRS financial information metrics do not have standardised meanings under the Australian Accounting Standards and, as a result, may not be comparable to the corresponding metrics reported by other entities.
The non-IFRS financial information metrics in this release are unaudited.
29Metals uses these non-IFRS financial information metrics to assess business performance and provide additional insights into the underlying performance of its assets.
The Appendix to this release sets out the definitions for non-IFRS financial information metrics used in this release, along with a reconciliation of Adjusted NPAT to NPAT and EBITDA to NPAT.
Non-IFRS financial information should be considered in addition to, and not as a substitute for, financial information prepared in accordance with Australian Accounting Standards. Readers are cautioned not to place undue reliance on non-IFRS financial information cited in this release.
Pro forma financial information
In addition to the non-IFRS financial information metrics referred to above, this release contains pro forma financial information. Pro forma financial information is non-IFRS financial information and is unaudited.
The pro forma financial information in this release has been included to provide investors with additional insights regarding the operating and financial performance of the Group for the full year because the statutory financial information excludes the financial and operating performance of Capricorn Copper in the period prior to the 29Metals IPO.
Information regarding the basis of preparation of the statutory results is summarised in this release and set out in the 2021 Financial Results separately released today.
For presentation purposes, the pro forma financial information in this release is compared against the PPF. Information regarding the basis of preparation of the PPF and the assumptions underpinning the PFF are set out in section 5 of the 29Metals Prospectus.
The pro forma financial information in this release should be considered in addition to, and not as a substitute for, financial information prepared in accordance with Australian Accounting Standards. Readers are cautioned not to place undue reliance on non-IFRS financial information cited in this release.
2
For personal use only
2021 | Full Year Financial Results
Statutory financial results
In 2021, 29Metals completed a series of restructure and IPO transactions (together, the 'Restructure and IPO Transactions'), whereby 29Metals acquired Capricorn Copper, Golden Grove and Redhill, establishing the Group and culminating in the successful 29Metals IPO in July 2021 raising gross proceeds of $528 million.
For statutory accounting purposes, the Golden Grove Group has been determined to be the acquiror in the Restructure and IPO Transactions, by way of reverse acquisition of 29Metals (comprising the Capricorn Copper and Redhill groups). This accounting treatment flows through the statutory financial results for the Group for the year ended 31 December 2021 and includes accounting adjustments required for the first-time adoption of IFRS financial reporting for Golden Grove, LP. Consequently, 29Metals' statutory results for 2021 reflect:
- the financial results of the Golden Grove Group for the six months ended 30 June 2021; and
- the financial results for the Group for the six months ended 31 December 2021.
The statutory financial results for the prior corresponding period are the statutory financial results of the Golden Grove Group for the year ended 31 December 2020.
Summary results
2021 | 2020 | CHANGE | ||
Revenue 1 | $'000 | 600,762 | 434,451 | 166,311 |
Cost of sales | $'000 | (464,118) | (325,839) | (138,279) |
Gross profit | $'000 | 136,644 | 108,612 | 28,032 |
EBITDA 2 | $'000 | 177,291 | 155,527 | 21,764 |
Operating cash flow | $'000 | 75,098 | 130,602 | (55,504) |
Profit before net finance costs and income tax expense | $'000 | 48,039 | 135,175 | (87,136) |
Net finance costs 3 | $'000 | (30,262) | (100,661) | 70,399 |
Profit before income tax expense | $'000 | 17,777 | 34,514 | (16,737) |
Income tax gain / (expense) | $'000 | 103,236 | (34,514) | 137,750 |
Net Profit After Tax ('NPAT') | $'000 | 121,013 | 0 | 121,013 |
Adjusted NPAT 2 | $'000 | 55,796 | 82,716 | (26,920) |
Earnings per share ('EPS') 4 | cents | 48.5 | N/a | N/a |
Adjusted EPS 2, 4 | cents | 22.4 | N/a | N/a |
Cash and equivalents | $'000 | 197,472 | 107,215 | 90,257 |
Net Drawn Debt 2 | $'000 | 3,499 | 112,561 | (109,062) |
Copper price 5 | US$/t | 9,305 | 6,175 | 3,130 |
Exchange rate 5 | AUD:USD | 0.752 | 0.691 | (0.020) |
- Revenue comprises revenue for all mineral concentrate sales, inclusive of final shipment invoice and quotational period ('QP') adjustments, and after treatment and refinement costs and charges ('TCRCs').
- EBITDA, Adjusted NPAT, Adjusted EPS and Net Drawn Debt are non-IFRS financial information metrics. Refer to important information regarding the use of non-IFRS financial information metrics on page 2 of this release.
- Includes impact of IFRS first time adoption, including recognising attributable profit and distributions to the partners of Golden Grove, LP in Net finance cost. Refer to Notes 2 and 41 of the 2021 Financial Results for further information.
- EPS for the prior period cited as N/a (not applicable) on the basis that partner capital contributions to Golden Grove, LP, are treated as a financial liability for accounting purposes.
- Copper price and AUD:USD exchange rate are averages for the period (Source: FactSet).
Revenue for 2021 increased by $166.3 million, or 38%, from 2020, reflecting higher realised AUD commodity prices and the inclusion of Capricorn Copper revenue in the second half, partly offset by lower production from Golden Grove driven by lower mined grades in 2021 which were negatively impacted by the rescheduling of the stope mining sequence announced in the quarterly report for the September 2021 quarter.
Cost of sales increased by $138.3 million, or 42%, from 2020, reflecting cost and labour pressures, particularly in the second half of 2021, and the inclusion of Capricorn Copper costs of sales for the second half. Increased costs included the impact of labour market pressures, particularly in Western Australia, and the continuing impact of COVID-19 related cost pressures.
COVID-19 impacted 29Metals directly and indirectly in 2021 through delivery delays, timing impacts for specialised services, implementation of COVID-19 Management Plans, and continuing labour market pressures exacerbated by state border closures and restrictions on FIFO access.
2021 Gross profit of $136.6 million (2020: $108.6 million) increased by $28.0 million, or 26%, from 2020, reflecting
increased revenue partly offset by higher cost of sales. 2021 Operating cash flow of $75.1 million (2020: $130.6 million) reflects the higher Gross profit result, working capital movements in relation to ore stockpiles and trade payables and payment of transaction costs in relation to the Restructure and IPO Transactions.
3
For personal use only
2021 | Full Year Financial Results
A loss was recorded on derivative financial instruments, primarily in relation to copper hedges at Capricorn Copper and the impact of movements in foreign exchange rates in relation to US$ denominated debt balances. This compares to 2020 which was a gain on derivative financial instruments reflecting a mark-to-market gain on the gold hedges at Golden Grove and foreign exchange US$ denominated debt. The 2021 Financial Results include a loss of $11.1 million (2020: $8.4 million gain) on derivative financial instruments and a loss of $13.5 million (2020: $26.8 million gain) on foreign exchange.
Administration costs increased by $14.0m and other expenses increased by $41.7 million due to the inclusion of one- off IPO expenses of $18.3 million and $26.4 million of stamp duty triggered by the reverse acquisition of the Golden Grove Group.
Profit before net finance costs and income and tax expense reduced by $87.1 million in 2021 to $48.0 million (2020: $135.2 million), primarily reflecting the combination of higher gross profit, unrealised losses on derivative financial instruments and unrealised losses on foreign exchange, and higher administration and other expenses.
NPAT in 2021 was $121.0 million (2020: nil), after IPO transaction costs and stamp duty referred above and a tax benefit of $119.4 million from the reset of tax cost base following formation of the 29Metals tax consolidated group. The 2021 NPAT result is after recognising distributions at the Golden Grove, LP level of $14.9 million (2020: $82.7 million) as a finance cost in accordance with IFRS.
Adjusted NPAT has been derived after removing the post-tax impact of non-recurring items from reported statutory NPAT. 2021 Adjusted NPAT was $55.8 million, a $26.9 million decrease from 2020. Refer to the Appendix for a reconciliation of Adjusted NPAT to NPAT.
Balance sheet
In addition to the Restructure and IPO Transactions, in 2021 29Metals successfully completed a refinance, replacing pre-IPO Golden Grove facilities with new Group corporate debt facilities.
The table below summarises 29Metals debt facilities and cash position at 31 December 2021.
UNITS | 2021 | |
Term loan facility | $'000 | 200,971 |
Working capital facility | $'000 | 0 |
Drawn Debt 1 | $'000 | 200,971 |
Cash and cash equivalents | $'000 | 197,472 |
Net Drawn Debt 1 | $'000 | 3,499 |
Drawn Debt / 2021A pro forma EBITDA | x | 0.79x |
Net Drawn Debt / 2021A pro forma EBITDA | x | 0.01x |
1. Drawn Debt and Net Drawn Debt are non-IFRS financial information metrics. Refer to important information on page 2 regarding the use of non-IFRS financial information metrics in this release.
Cash and cash equivalents at 31 December 2021 is after payment of all Restructure and IPO Transactions costs, other than Western Australia stamp duty, for which a provision for $26 million has been included in the 2021 Financial Result. This amount is subject to assessment from Western Australia revenue authorities.
The Group debt facilities include environmental bonding facilities of $58 million for Capricorn Copper. The Group US$40 million working capital facility is undrawn.
As foreshadowed in the 29Metals Prospectus, in 2021 29Metals cash-settled the outstanding 2021 copper hedges at Capricorn Copper from IPO proceeds.
Remaining metal hedges are summarised below. 29Metals has no copper hedging beyond the September quarter in 2022.
COPPER HEDGES | GOLD HEDGES | |||
YEAR ENDING 31 DECEMBER | TONNES | A$/TONNE 1 | OUNCES | A$/OUNCE 1 |
2022 | 7,200 | 8,990 2 | 13,992 | 2,590 |
2023 | - | - | 10,008 | 2,590 |
2024 | - | - | 10,008 | 2,590 |
2025 | - | - | 10,008 | 2,590 |
- A$/tonne and A$/ounce cited is the average of hedging commitments for the period.
- 2022 copper hedges apply to March, June and September 2022 quarters.
At 31 December 2021, the remaining Capricorn Copper copper hedges represented a $31.3 million financial liability, and Golden Grove gold hedges represented a $1.5 million financial asset. Realised and unrealised hedging gains and losses are reported in the Statement of Comprehensive Income5 for the relevant period.
- Reported as "Net gain / (loss) on derivative financial instruments".
4
For personal use only
2021 | Full Year Financial Results
Pro forma financial results
Set out below is a summary of the financial results for the Group for the year ended 31 December 2021 on a pro forma basis. Pro forma financial information is non-IFRS financial information and is unaudited. Refer to important information regarding the use of non-IFRS financial information on page 2 of this release.
The pro forma financial information has been prepared as if the following had occurred prior to 1 January 2021:
- the acquisition and restructuring transactions undertaken to form the Group;
- the 29Metals IPO; and
- the repayment or reduction of certain Capricorn Copper and Golden Grove liabilities out of IPO proceeds.
Further information regarding the preparation of pro forma financial information is set out in the 2021 Financial Results.
For presentation purposes, the pro forma financial results are compared to the PPF.
Summary pro forma results
UNITS | 2021 RESULT 1 | 2021 PPF 2 | VARIANCE | |
Pro forma Revenue 3 | $'000 | 709,597 | 665,330 | 44,267 |
Pro forma Cost of sales | $'000 | (561,303) | (550,211) | (11,092) |
Pro forma Gross Profit | $'000 | 148,294 | 115,119 | 33,175 |
Pro forma EBITDA 4 | $'000 | 254,066 | 220,988 | 33,078 |
Golden Grove | $'000 | 163,413 | 170,431 | (7,018) |
Capricorn Copper | $'000 | 109,906 | 70,384 | 39,522 |
Exploration, Corporate & Other | $'000 | (19,254) | (19,827) | 573 |
Pro forma NPAT | $'000 | 34,336 | 36,524 | (2,188) |
Cu-eq4 production | kt | 68.2 | 67.4 | 0.8 |
% copper sales 5 | % | 65% | 50% | 15% |
Average realised copper price | US$/lb sold | 9,305 | 9,442 | (137) |
C1 Costs 4 | US$/lb | 2.12 | NA | NA |
AISC 4 | US$/lb | 3.41 | NA | NA |
- 2021 Result is the result for the year ended 31 December 2021 on a pro forma basis (refer above).
- 2021 PPF is pro forma forecast financial information set out in section 5.9 of the 29Metals Prospectus.
- Revenue comprises revenue for all mineral concentrate sales, inclusive of final shipment invoice and QP adjustments, and after TCRCs.
- EBITDA, Cu-eq, C1 Costs and AISC are non-IFRS financial information metrics. Refer to important information regarding the use of non-IFRS financial information metrics in this release.
- % Copper sales is gross copper sales proceeds (before final invoice and QP adjustments, and TCRCs), divided by the sum of gross sales proceeds for copper, zinc, gold, silver and lead (before final invoice and quotational period adjustments, and TCRCs)
Pro forma revenue of $709.6 million for 2021 was $44.3 million, or 7%, higher than the PPF, reflecting higher copper production for the year and higher realised commodity prices relative to the commodity price assumptions for the PPF. Pro forma revenue was partly offset by lower than forecast by-product metal production, reflecting the rescheduling of the stope sequence at Golden Grove (announced in the September 2021 quarterly report).
Gross copper sales represented 65% of group gross sales, a 15% increase on 2020, reflecting a combination of increased copper production from Capricorn Copper and a higher proportion of copper revenue at Golden Grove in 2021, relative to 2020.
Pro forma cost of sales of $561.3 million for 2021 was $11.1 million, or 2%, higher than PPF, reflecting higher mining costs as a result of cost and labour market pressures, particularly in the second half, including the continuing impact of COVID-19 related border restrictions, partly offset by stockpile movements. Stockpile movements reflect a combination of timing differences between production and sales and a build-up in stockpile balances as a result of tailings-related throughput constraints in 2021.
Higher pro forma revenue, partly offset by increased pro forma cost of goods sold, resulted in pro forma gross profit of $148.3 million and pro forma EBITDA of $254.0 million, 29% and 15% higher than PPF, respectively.
Pro forma NPAT for 2021 was $34.3 million, $2.2 million, or 6%, lower than PPF, and included the impact of unrealised foreign exchange losses and losses on derivative financial instruments.
5
This is an excerpt of the original content. To continue reading it, access the original document here.
Attachments
- Original Link
- Original Document
- Permalink
Disclaimer
29Metals Ltd. published this content on 22 February 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 22 February 2022 22:57:54 UTC.
