Metals X Limited

MLX Releases Shareholder Update: Metals X Limited (ASX: MLX) is engaged in the operation of tin and copper mines in Australia along with the exploration and development of base metals projects in Australia.

The company recently provided an update on activities across its operations and projects. With respect to the Nifty Copper Operations, the company has been carrying out care and maintenance as planned, with 85% of staff and contractors now off-site. Monthly care and maintenance costs have been estimated at $1.4 million per month, one-third of which is associated with take-or-pay supply contracts and equipment leasing costs and the remaining is associated with routine care & maintenance activities. The company is also looking forward to cost reductions through a reduction in the work plan, manpower requirements and accommodation/flight options. In addition, the company has begun with a strategic review of the operations, announced in November 2019. The company also notified that the first-half results included a significant non-cash impairment in the carrying value of the assets at the operations due to the announcement regarding the site moving into a Care and Maintenance phase and the re-estimation of the provision for rehabilitation. 

Coming to the tin operations, the company has downgraded the guidance for production in the second half of 2019 and the first half of CY20.The change came in as a result of lower grades of ore mined from the Lower Federal area and delayed stoping from Area 5. As per the revised guidance, production of tin in concentrate is expected to be in the range of 7,000 – 7,400 tonnes against the previous guidance range of 8,000 – 8,500 tonnes. All-in-sustaining cost is expected to come in the range of $18,200 - $19,100/t Sn as compared to the previous guidance range of $17,000 - $17,500/t Sn. The company reported good progress in relation to the Metallurgical Improvement Program, which demonstrated improvements in metallurgical recovery against the planning models. During the quarter ended 30 September 2019, revenue from the Renison Tin operations stood at $46.46 million as compared to $42.63 million in the previous quarter.

Renison Tin Operations Revenue (Source: Company Reports)

Corporate Update:To support the resolution of the ongoing strategic review, the company has recently appointed Patrick O’Connor as the Executive Chairman.

What to Expect: In January 2020, the company will be providing an update on the cost reduction plans with respect to the Nifty Copper Operations. In addition, the company will also update the shareholders on the strategic review process for the operations in February 2020. The completion of the Area 5 Optimisation Study is planned for the end of March 2020, subsequent to which the company will be providing the production guidance for subsequent years. The company is also planning to develop a formal proposal for the Mt Bischoff closure plan, which will be lodged for approval in mid-2020. During the first 6 years of closure, the company expects total costs to be ~$16.3 million. The company is seeking to raise capital in the first half of 2020 to maintain a resilient balance sheet.

Stock Performance: The stock of the company has generated negative returns of 53% and 58.76% over a period of three months and six months, respectively. The stock made its new 52-week low of $0.064 as on 18 December 2019 and managed to close at $0.070, down 28.571%.

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