SINGAPORE (July 9): Fortress Minerals, the producer and exporter of high-grade iron ore concentrate from Malaysia, reported 1Q20 earnings increased 37% to US$1.1 million ($1.5 million) from 1Q19 a year ago.
Earnings per share and net asset value per share for 1Q20 was 0.23 US cents and 5.05 US cents respectively.
Excluding US$0.9 million IPO expenses and unrealised foreign exchange loss of US$0.2 million, 1Q20 net profit came in at US$2.3 million.
In 1Q20, the group generated a revenue of US$5.8 million, or an average revenue of US$95.16 per WMT, after 61,386 wet metric tonnes (WMT) of high grade iron ore concentrate were produced and sold.
No revenue was generated in 1Q19 as commercial production at its Bukit Besi mine only started in April 2018 and the first batch of the high grade iron ore concentrate shipped out in 2Q19.
Gross profit for 1Q20 stood at US$4 million, resulting in a gross profit margin of 68.6%. This was through the optimisation of its production and cost efficiencies in FY20 which was the group’s second year of commercial production.
Other operating income fell 80.6% to US$0.4 million for 1Q20 from US$2.2 million in 1Q19 which recorded an income of US$2.2 million from the one-off sale of 32,998 WMT semi-processed iron ore produced from the trial runs of its Bukit Besi mine’s processing plant prior to commercial production in April 2018.
In 1Q20, the group also saw income from the one-off sale of 5,193 WMT semi-processed iron ore produced from the trial runs of its new ball mills at its Bukit Besi mine.
Selling and distribution expenses decreased by 30.5% to US$0.6 million in 1Q20 as no freight and stevedoring charges were incurred during this period as sales were made only to domestic steel mills during the quarter.
Other operating expenses increased by US$0.7 million to US$0.9 million in 1Q20, as a result employee benefits and higher expenses on upkeep and maintenance of site machinery, motor vehicles and equipment at its Bukit Besi mine, in line with the increase in the group’s business activities.
Admin expenses increased by US$1.2 million to US$1.3 million for 1Q20 mainly due to one-off listing expenses of US$0.9 million for the company’s IPO and unrealised foreign exchange loss of US$0.2 million.
A 0.16 cent interim dividend has been declared and paid.
Against the backdrop of favourable iron ore market outlook, Fortress says demand for the group’s high-grade iron ore concentrate is expected to remain healthy in the short to medium term. This is further supported by stringent pollution control regulations on China’s steel mills resulting in industry players continuing to optimise their production yield and cost efficiency.
Looking ahead, the group will also continue to explore within and beyond the East, West and Valley deposits to identify new resources. The group will also keep a keen eye on potential acquisition or joint venture opportunities to bolster resources level.
Shares in Fortress last traded at 26 cents.
