Solid 1H11 Financial Performance Supported by the Increases in Sales Volumes and Commodity Prices
Sales
Ferronickel
The sales of ferronickel, which were all exported, grew by 8% in 1H11 to Rp1.97 trillion compared to the sales in 1H10 amounting to Rp1.83 trillion. The rise was in line with the 20% increase in the average selling price of ferronickel in 1H11 to US$11.29 per lb. despite a 7% lower ferronickel sales volume of 9,072 tones of nickel contained in ferronickel (TNi) due to the ferronickel shipments in transit and were yet to be recognized as revenue. The production volume of ferronickel in 1H11 recorded a 6% increase compared to 1H10 to 9,838 tones.
Nickel Ore
In 1H11, ANTAM recorded nickel ore sales amounting to Rp1.19 trillion, up by 7% compared with 1H10 sales revenue of Rp1.11 trillion. The increase was due to an escalated sales volume of nickel ore by 5% in 1H11 to 2,869,064 wet metric tons (wmt) as well as an increase in the average selling prices. The production volume of nickel ore in 1H11 rose 15% to 3,909,479 wmt compared to the production volume in 1H10 of 3,393,336 wmt.
Gold
Inline with a 27% increase of the average selling price of gold in 1H11 to US$1,472.81 per troy ounce (toz) compared to 1H10 as well as a 6% sales volume increase to 3,611 kg, ANTAM’s revenue from gold jumped 105% over 1H10 to Rp1.5 trillion. Gold production in 1H11 fell by 10% to 1,241 kg compared to 1H10 as ANTAM has yet to reach the planned gold veins in the Cibaliung mine.
Coal
With the acquisition of the Sarolangun coal mine in Jambi, ANTAM through its subsidiary, PT Indonesia Coal Resources, recorded a coal sales volume of 194,263 tons worth of Rp26.2 billion in 1H11. The volume of coal production reached 215,150 tons in 1H11.
Profitability
ANTAM's gross profit in 1H11 rose by 17% to Rp1.65 trillion compared with 1H10 with a gross margin of 34%. The cost of goods sold in 1H11 rose 11% to Rp3.24 trillion which was mainly driven by a 52% increase of precious metals purchases to Rp1.07 trillion as well as a surge in the cost of fuel by 27% to Rp588.7 ??billion due to increases in the production of ferronickel and fuel prices.
ANTAM's operating income surged 16% to Rp1.27 trillion with an operating margin of 26% in 1H11. ANTAM’s income before income tax rose 35% to Rp1.39 trillion as ANTAM also received dividend income from PT Nusa Halmahera Minerals of Rp171 billion.
In 1H11 ANTAM’s cash and cash equivalents amounted to Rp2.84 trillion with outstanding investment loans of Rp281.5 billion, reflecting ANTAM’s robust net cash position to support its growth projects.
ANTAM Increases 2011 Nickel Ore Production and Sales Target due to Strong Demand
ANTAM is confident that its operating and financial performance in 2011 will remain solid amidst the current commodity prices volatility. Due to strong demand, ANTAM increases its 2011 production and sales targets of nickel ore. ANTAM’s 2011 nickel ore production volume is revised up from 7.65 million wmt to 7.79 million wmt. Nickel ore sales target is revised up to 6.28 million wmt from 5.86 million wmt. As ANTAM has yet to reach the planned gold veins in Cibaliung, gold production and sales of 2011 are revised to 3,025 kg and 5,820 kg, respectively.
ANTAM’s Growth Projects: On Track
The development of ANTAM’s key projects, the Chemical Grade Alumina (CGA) Tayan Project, the Ferronickel Halmahera Project, the Modernisation and Optimisation of Pomalaa Ferronickel Plants, the Smelter Grade Alumina (SGA) Mempawah Project and the Nickel Pig Iron (NPI) Mandiodo Project remains on track.
ANTAM’s Tayan CGA project has begun construction since April 2011. The Tayan CGA project is developed by PT Indonesia Chemical Alumina, a jointly controlled entity of ANTAM and Showa Denko K.K. Japan. Development of the project is on track. PT Indonesia Chemical Alumina will drawdown in stages beginning in the fourth quarter of 2011 the US$292.5 million equivalent of credit facility obtained from JBIC and a consortium of Japanese banks to help fund the project.
In August 2011, ANTAM appointed financial arranger consortium comprising of Bank Mandiri, Bank Rakyat Indonesia, Mandiri Sekuritas, Goldman Sachs, Deutsche Bank, Sumitomo Mitsui banking Corporation Ltd. and Standard Chartered Bank to assist ANTAM to receive the optimum funding scheme of its growth projects. The consortium is currently analysing the optimum financing scheme. One of the option to fund ANTAM’s growth projects is to issue bonds at the end of 2011. ANTAM plans to start ground breaking of the FeNi Halmahera project at the end of 2011 through the development of the jetty.
ANTAM is currently conducting the tenders for the Modernisation and Optimisation of Pomalaa Ferronickel Smelters Project. ANTAM expects the start of the project will begin in November 2011 through the routine overhaul of its FeNi II smelter. The overhaul is expected to take four months. ANTAM’s 2011 ferronickel production target of 18,000 TNi will remain unchanged.
The SGA Mempawah Project and the NPI Mandiodo Project are progressing on track and are currently at the feasibility study phase.
