Saudi miner Ma’aden lifts off as profits rocket

A 70 percent year-on-year increase in gold production helped boost Maaden's profit by 120 percent in the first quarter. Getty
Updated 03 May 2018
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Saudi miner Ma’aden lifts off as profits rocket

  • Profits rise on increased gold production, revenues rise 32 percent
  • Ma’aden mines gold, copper, aluminum and phosphates in Saudi Arabia

LONDON: Saudi mining company Ma’aden cheerked the market on Thursday with first quarter figures significantly ahead of analyst expectations, sending the Tadawul-listed stock 2 percent higher.

Gold was the standout feature as production rocketed to 118,000 ounces, up 70 percent year-on-year — a quarterly record.

It has been a good time to lift production of the yellow metal, seen as a hedge against global geopolitical uncertainty.

Group net profit surged over 120 percent in the first three months of 2018 against the same period in 2017, and sales were up 32 percent.

“By continuing to generate greater production from our assets whilst maintaining pressure on costs, we were able to capitalize on the generally positive commodity price environment,” said CEO Khalid Al-Mudaifer.

Ma’aden, which mines gold, copper, aluminum and phosphates — all at sites in Saudi Arabia — is ramping up production across many of its operations. Investors have piled into the shares, which trade on 25 times forward earnings making them highly-rated, but relatively expensive.

The company’s portfolio includes a joint venture with Barrick Gold of Canada.

In an interview with Arab News, Youssef Husseini, mining analyst at broker EFG Hermes in Cairo, said: “These results are exceptional with the cost profile impressive after a cost-cutting program — the margin came in 400 basis points up from where we thought.”

Al-Mudaifer pointed to a 36 percent increase in earnings before interest, tax, depreciation and amortization (Ebitda), a key market measure.

Ma’aden’s new phosphate operation at Wa’ad Al-Shamal was said to be progressing well as was the next phase of growth at its largest ever gold mine, the “Mansourah Massarah project”. An investment decision on further expansion was expected in the second quarter.

Commodity price volatility was forecast to be a feature of 2018 “but as the first quarter results show, we are well placed to deliver strong profitability built on the basis of strong underlying trends in our core commodities,” said Al-Mudaifer.

The only potential fly in the ointment, said Husseini, was the possibility of higher energy costs if Saudi Electricity upped its charges before the year is out. “We shall have to wait and see,” he said.

Al-Mudaifer said the first quarter saw a drop in the price of aluminum but the price trend remained favorable compared to 2016 and 2017 and “we continue to believe in the long-term fundamentals for this metal.”

He added: “Phosphate prices remained robust as did gold and copper although the latter dropped slightly in the quarter after a year of solid gains in 2017.”

Cash generated from operations was SR543 million ($144.7 million); a decrease of 28 percent compared to the first quarter of 2017, primarily due to increased working capital requirements, said the company.

Ma’aden’s liquidity position remained strong with cash and equivalents topping SR6 billion.


Sri Lanka calls for global coalition to tackle rising dollar

Updated 6 min ago
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Sri Lanka calls for global coalition to tackle rising dollar

  • The island’s currency bottomed out at a record-low 174.12 rupees to the dollar
  • The rupee has shed more than 12 percent of its value this year and Sri Lanka fears it could slide further

COLOMBO: Sri Lanka on Tuesday called for a “coalition of the willing” to help stabilize free-falling emerging market currencies around the globe, as the beleaguered rupee slumped to fresh lows.
The island’s currency bottomed out at a record-low 174.12 rupees to the dollar, resisting a slew of measures by policymakers to arrest its steady decline.
The rupee has shed more than 12 percent of its value this year and Sri Lanka fears it could slide further as US sanctions squeeze Iran, the island’s chief source of oil.
A stronger dollar has made it difficult for emerging markets to repay debts and battered global currencies from Turkey to India and Argentina.
Finance Minister Mangala Samaraweera invited those nations experiencing currency crises to visit Colombo and hash out a strategy.
“The rise of the dollar is having a serious impact on our currencies. We are not the only one affected,” he told reporters in the Sri Lankan capital.
“I want to build a coalition of the willing to deal with this problem. I don’t see the global situation improving any time soon.”
Washington pulled out of a landmark 2015 nuclear deal with Iran in May and has been reimposing punishing sanctions on the Islamic republic, targeting in particular its financial system.
Iran not only supplies Sri Lanka with most of its oil, but is one of its chief buyers of the island’s celebrated tea.
Samaraweera has warned that blockading Iran will have ripple on effects on Sri Lanka, which has been unable to stop the rupee from nose diving.
Last month, Colombo curbed its state institutions and public servants from importing cars to reduce the outflow of foreign capital.
Banks were also ordered to restrict lending for purchasing overseas and consumer goods, but the rupee has continued its decline.
In August, the government substantially increased taxes on small cars to discourage imports, but officials said there was still pressure on foreign exchange reserves to finance big-ticket imports.