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MMG copper drops on Las Bambas issues

MMG reported a weaker quarter of production as restrictions imposed to restrict the spread of COVID-19 impacting operations.
MMG copper drops on Las Bambas issues MMG copper drops on Las Bambas issues MMG copper drops on Las Bambas issues MMG copper drops on Las Bambas issues MMG copper drops on Las Bambas issues

MMG's Las Bambas copper operation in Peru

March quarter production was 91,911 tonnes of copper, down 24% quarter-on-quarter, and 52,957t of zinc.

Copper production was impacted by a 28% drop in output at Las Bambas in Peru to 73,319t due to operational challenges and community blockades which temporarily restricted inbound and outbound logistics.

The site faced additional disruptions to mining and production activities due to maintenance requirements and the enactment of Peru's state of emergency in mid-March in response to the COVID-19 outbreak in the country.

Last week, MMG withdrew 2020 guidance for Las Bambas due to the issues.

CEO Geoffrey Gao said today he was hopeful concentrate transport could resume next week, after which things could get back to "normal very quickly".

The company said it wasn't considering putting the mine on care and maintenance.

Kinsevere in the Democratic of Congo had a strong quarter, producing 18,207t, up 45% year-on-year.

The company is studying a "new era" for Kinsevere, including the possible addition of a sulphide ore and cobalt processing circuit.

MMG chief financial officer Ross Carroll said there had been no cases of COVID-19 in the Katanga province, where Kinsevere is.

"So far, so good in Katanga province," he said.

Gao said while the company expected commodity prices to remain volatile in the near-term, it was confident that strong fundamentals for both commodities would prevail.

"MMG continues to maintain the confidence and support of our major shareholder China Minmetals Corporation and we will continue to focus on optimising our business and ensuring that we are well placed to recover quickly as COVID-19 restrictions ease in China and elsewhere," he said.

The company had debt of US$7.7 billion at December 31.

Carroll warned last month that current commodity prices, MMG would be unable to make a $700 million loan repayment due next year.

"Liquidity is something we're carefully managing," he said today.

He said the company was in talks for additional facilities, which would likely be at a lower cost.

MMG shares halved over the March quarter but have slightly recovered from the March 23 low of HK$1.03. The stock rose 1.5% today to $1.30, valuing it at $10.47 billion (A$2.1 billion).