SINGAPORE (July 8): Fortress Minerals, the producer and exporter of high-grade iron ore concentrate from Malaysia, reported a 97.9% increase in 1Q21 earnings to US$2.2 million ($3.0 million) from US$1.1 million in 1Q20 a year ago.

Earnings per share and net asset value per share for 1Q21 was 0.43 US cents and 6.25 US cents respectively.

The company recorded 1Q21 revenue of US$7.1 million, a 21.4% increase y-o-y.

Despite the halt in business activities in March and April due to the nationwide movement control order (MCO) in Malaysia, Fortress Minerals sold 74,661 dry metric tonnes (DMT) of high-grade iron concentrate in the quarter ended May 31.

The amount represents a 34.4% increase y-o-y, compared to the 55,552 DMT sold in 1Q20 ended May.

The company says demand for its products from local steel mills remained strong throughout the quarter.

However, fluctuations in the IODEX 65% Fe CFR North China of Platts Daily Iron Ore Assessments price indices in 1Q21 lowered its average selling price by 8.1% y-o-y to US$94.97/DMT for the quarter.

The company’s lower average unit costs at US$24.88 per wet metric tonne (WMT) in 1Q21, which represents a 16.6% y-o-y decrease, was attributable to improved economies of scale through higher production volume.

Gross profit for 1Q21 increased 25.8% y-o-y to US$5 million. Correspondingly, gross profit margin increased by 2.5% to 71.1% in the same quarter.

The increase in both gross profit and gross profit margin are mainly driven by a higher sale volume and a lower average unit cost of sales achieved.

Other operating income fell 82.1% y-o-y due to the absence of a one-off sale of semi-processed iron ore of US$0.4 million generated 1Q20. This was offset by interest income of US$27,824, derived from funds placed with financial institutions.

Administrative expenses fell to US$0.2 million in 1Q21 from US$1.3 million in 1Q20 primarily on the absence of one-off listing expenses in 1Q21, as well as a decrease in realised foreign exchange loss by overall fluctuations of SGD against USD on SGD-denominated bank balances.

Other operating expenses increased to US$1.4 million from last year’s US$0.9 million due to the continuous payout of employees’ payroll expenses throughout the temporary cessation of business by the MCO.

An increase in plant maintenance expense by US$40,868 which is in line with the productivity resumption in its Bukit Besi Mine partially contributed to the increase in other operating expenses.

No dividend was declared for 1Q21.

Fortress Minerals says it will deploy the remaining IPO proceeds of $8.9 million as it intends to acquire, enter into joint venture and/or develop new mines as and when the opportunity arises.

As at end May, cash and cash equivalents stood at US$9.5 million.

Shares in Fortress Minerals closed flat at 21 cents on Wednesday.