Maaden posts 17% decline in gold production in Q2 2019

Saudi Arabian Mining Co. (Maaden) produced 85,000 ounces of gold, down 17 percent year-on-year (YoY), but up 9 percent quarter-on-quarter (QoQ) in Q2 2019.

The performace was mainly due to lower mill feed gold grade in the Ad Duwayhi mine and increased waste stripping, the company said in a bourse statement.

Maaden also sold 1.26 million tons of ammonium phosphate fertilizers (APF), an increase of 69 percent YoY, driven by the Maaden Waad al Shamal Phosphate Co.'s (MWSPC) phosphate commercial operations, which began in December 2018. 

Q2 2019 ammonia production stood at 600,000 tons, up 18 percent YoY, due to turnaround maintenance.

The primary aluminum production reached 239,000 tons in Q2 2019, up 2 percent QoQ and 1.2 percent YoY, due to higher metal supply by Can Rec unit.

The alumina production in Q2 2019 hit 465,000 tons, up 7 percent QoQ and 2 percent YoY.

Maaden attributed Q2 2019 losses to lower commodity prices in the global markets, which weighed on the company's profit by SAR 481 million, in addition to the one-time costs at SAR 159 million pertaining to the restructuring of its aluminum rolling unit.

The company’s profitability was also hit by higher input costs and operating expenses including fixed costs, general and administrative expenses, selling, marketing, and financing costs, after the full recognition of the operating costs of MWSPC and Maaden Rolling Co. (MRC) which launched commercial operations in December 2018.

Q2 2019 earnings before interest, tax, depreciation and amortization (EBITDA) stood at SAR 1.3 billion, down 29 percent YoY.

“The second quarter of 2019 showed further weakness in our core commodities, phosphate and aluminum, with prices continuing downward trends seen since 2018," Maaden President and CEO, Darren Davis, commented on the results.

“Although gold prices remained strong, aluminum prices are still pressured due to the instability in the global markets,” Davis added.

“Phosphate fertilizers were hit by higher exports from China. Our MWSPC project made further good progress in the second quarter in ramping up operations and across the business, production in most of our units reached record highs," he explained. 

“As market challenges are likely to continue, production is expected to reach record levels in 2019, amid the company's focus on operational excellence,” Davis continued.

In Q2 2019, the company swung to a net loss after zakat and tax of SAR 243.7 million, compared to a net profit of SAR 517.8 million in Q2 2018 and net profit of SAR 127.2 million in the previous quarter, Argaam reported.