Fortress Minerals, the producer and exporter of high-grade iron ore concentrate from Malaysia, reported earnings of US$4.3 million ($5.7 million) for the 3QFY2021 ended November 2020, more than double the earnings compared to the US$751,151 registered in 3QFY2010.

Earnings per share (EPS) for the quarter stood at 87 US cents, compared to 15 US cents in 3QFY2020.

For the nine months, the group reported earnings of US$12.2 million, almost three times as much as the US$4.4 million for the 9MFY2020.

EPS for the nine-month period ended November was US$2.44 compared to the 88 US cents a year ago.

The group says it had a strong quarter in 3QFY2021 as it registered higher revenue of US$10.3 million, with 93,246 dry metric tonnes (DMT) of iron ore concentrate sold during the period.

The quarter’s revenue was slightly over double the US$4.1 million in 3QFY2020.

The group says the increase is attributable to a “favourable operating environment”, strong domestic market demand and a higher average realised selling price of US$110.06/DMT.

The higher average realised selling price is 30% higher than the average realised selling price of US$84.65/DMT in 3QFY2020.

Productivity gains due to the higher production volume during the 3QFY2021 improved average unit cost by US$7.04/ wet metric tonnes (WMT), or 21.8% higher than the US$25.26/WMT in the corresponding period the year before.

Due to the above factors, the group reported gross profit margin of 75.1% in 3QFY2021, up from 57.74% a year ago.


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The group’s EBITDA for 3QFY2021 stood at US$5.9 million.

The group says its net profit after tax (NPAT) of US$12.2 million for the 9MFY2021 had already exceeded FY2020’s full-year NPAT of US$6.5 million.

The group’s operations generated positive free cash flow of US$10.3 million supported by a “robust underlying EBITDA”.

As at November 2020, cash and cash equivalents stood at US$16.1 million.

Looking ahead, the group says it remains “optimistic” that demand for high-grade iron ore concentrate will remain “healthy” following its “Off-take agreement” in October 2020.

The agreement secures a 400,000WMT revenue order book volume until Aug 31.

Acquisition

The group adds that it had entered into a conditional share purchase agreement to acquire a 100% stake in Monument Mengapur for a consideration of US$30 million on Jan 8.


SEE: PhillipCapital positive on new iron ore producer Fortress Minerals


The group also entered into a royalty agreement with Monument Mining for the payment of royalties at the rate of 1.25% gross revenue on all mineral products produced in forms ready for sale from the area within the boundaries of Monument Mengapur’s subsidiaries.

The board says the proposed acquisition is in the group’s “best interests” as its total magnetite resource will increase to 17.93 million tonnes from 7.18 million tonnes from its Bukit Besi mine as of February 2020.

It says the proposed acquisition will “bolster” the group’s objective to become a “significant regional player in the iron ore industry.

Shares in Fortress Minerals closed flat at 28 cents on Jan 8.