London — Nyrstar's zinc and lead production rose year on year in the third quarter, but earnings slumped in line with the profit warning issued by the company last month, the Belgium-based producer said Tuesday.
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Nyrstar produced 270,000 mt of zinc metal from its processing operations in Q3, up 9% from output of 247,000 mt in Q3 2017, while lead output was up 41% year on year at 55,000 mt.
Underlying EBITDA fell by 74% to Eur13 million ($14.8 million) from Eur51 million in the year-earlier period, despite a 22% increase in revenues.
"The sharp decline in the zinc price over the course of the third quarter (down 22% compared to the H1 2018 average) compounded by historically low zinc treatment charges, increased energy prices in Europe and Australia, the restart expense of the Myra Falls mine and poor operating cost performance at our Middle Tennessee and Langlois mines produced a disappointing earnings result for the group," CEO Hilmar Rode said in a statement.
The Myra Falls mine in Canada achieved its first concentrate production in the quarter and is expected to make its first concentrate shipment in Q4 2018. Looking ahead, "our five zinc smelting operations remain consistent performers and have not experienced any material unplanned outages in 2018; and all four of our mines are now in operation and will benefit from a fixed forward hedge of c. $3,000/mt in 2019," Rode said.
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"The macro outlook for 2019 is also more promising, with the availability of zinc concentrate increasing and expectations of a materially higher zinc concentrate benchmark treatment charge," he added.
For the first nine months of this year, zinc metal production was up 4% from January-September 2017 at 797,000 mt, with lead output up a marginal 1% at 124,000 mt. Production of zinc in concentrate from Nyrstar's mining operations rose 22% to 107,000 mt.
Underlying EBITDA for January-September 2018 was Eur134 million, down 17% from Eur162 million in the year-earlier period.
Om September 20, Nyrstar cautioned that its H2 2018 earnings were set to fall short of H1 levels, primarily on the back of a sharp drop in zinc prices.
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