Masan digs deep for profitable u-turn

Masan Resources is flying high despite a dip in commodity prices

Despite a generally depressed commodity pricing environment over the course of 2015 – in particular, more than 30 per cent fall off in tungsten and bismuth market prices – Masan Resources has increased its sales revenue by 14 per cent on-year to just over VND2.078 trillion ($95.32 million) as of September 30, 2015.

Notably, its Earnings Before Interest, Taxation, Depreciation, and Amortisation (EBITDA) went up 28 per cent to almost VND900 billion ($41.28 million). Net profit for this year’s first nine months was VND72 billion ($3.3 million), which stands in stark contrast to the loss of VND312 billion ($14.31 million) during the same period last year. A hugely influential factor in the company’s dramatic reversal of fortune has been the contribution from Masan Resources’ Nui Phao mine in the northern province of Thai Nguyen – the world’s largest tungsten mine.

Aside from tungsten, the Nui Phao mine produces flourspar, bismuth, and copper, which are sold to customers across Northern America, Europe, and Asia. This supply has been a strategically important alternative source in terms of global supply since commercial production commenced in March 2014. Nui Phao is also one of the world’s leading producers of acid-grade fluorspar and bismuth outside of China.

Production across all of Nui Phao’s commodities has seen impressive growth in comparison with output levels at the end of 2014. There was a massive overall increase of 77 per cent for the first nine months of this year, with tungsten output climbing 27 per cent, and copper up 36 per cent against the last year-end figures. In addition, bismuth and fluorspar production more than doubled in the output.

According to the company’s analyses, this tremendous growth was attributable in part to huge improvements made in the infrastructure system and improved head grades. Also, higher plant utilisation levels and increasing recoveries across all of the processing circuits contributed towards the overall success. In addition, Masan Resources has focused on increasing production rates for the remainder of the year and has achieved steady operating levels since the fourth quarter of 2014. The firm is continuously seeking ways to extract additional minerals from the ore body, improve the recovery of existing minerals, and lower its production costs at the state-of-the-art Nui Phao mine. As part of the drive to increase productivity, Masan Resources has announced a number of expansion projects for completion within the next six months, which will further boost the recovery yields, particularly for tungsten and fluorspar products.

Masan Resources has also entered into a joint venture which will produce value-added products of ammonium para-tungstate, as well as blue and yellow tungsten oxides, allowing it to further diversify its range of products. The joint venture received the hi-tech status in 2015, recognising the use of world-class technology in its processes. The value-added chemical processing plant’s production rates have increased significantly, delivering additional benefits.

Masan Resources was listed on the HNX UPCoM board in September 2015 with a book value of VND11 trillion ($504.6 million). At the same time, the company completed a five-year bond issuance, raising VND8.1 trillion ($371.6 million) at a fixed year coupon rate. The proceeds from the bond were used to refinance existing borrowings, aiming at supporting Nui Phao’s competitive position as one of the world’s largest and lowest-cost tungsten producers.