In Response To Weakening World Manganese Prices
LONDON, Dec. 4, 2019 /CNW/ - Meridian Mining SE (TSX V: MNO) ("Meridian" or the "Company") today announces, that due to the continued depressed world manganese ore prices, production from the Company's Espigão d'Oeste Manganese operation ("Espigão Mn") in Rondônia, Brazil, will be immediately be put on temporary Care and Maintenance ("C&M"), while continuing to explore value maximizing alternatives, including discussions with the Company's major shareholder, Sentient Equity Partners, and other potentially interested parties.
Manganese ore ("Mn") prices have been under pressure since April 2019 due to rising inventories in Chinese ports, depressed manganese alloy prices and general poor market sentiment. China's manganese ore port stockpiles are currently at a 12 month high of 4.69 Mt, at the start of 2019 the stockpile was 2.90 Mt - a ~62% increase.
In parallel with the increasing stocks and since the start of the year, the price for +44% Mn concentrates CIF Tianjin (China) has relentlessly declined from USD 7.18 to USD 5.12; a ~30% decrease at the 3rd Quarter's end. Subsequent to the Quarter's end, the price weakened rapidly to USD 3.73 as of today - a ~48% decrease from the start of the year.
"With the continued state of oversupply in the manganese market and no expectation of change on the immediate horizon, it does not make commercial sense for the Company to continue producing and selling its high grade Espigão Mn concentrates at a financial loss" said Mr. Gilbert Clark, Meridian Mining's interim CEO. "The Company regrets what it hopes is a temporary impact, that this action will have on our workforce and other stakeholders and are doing what it can to cushion this, while ensuring the long-term sustainability of the Company. Meridian is retaining a core management/operations team (administration, mining, processing, geology and environmental personnel). We believe these actions will help shield the Company from the current depressed manganese price and is a long-term approach to the Espigão Mn; and one that will benefit all our investors and stakeholders as we continue the strategy to build & plan for long-term value. During this period of C&M for the Espigão Mn, the Company will continue to progress the Espigão polymetallic and Mirante da Serra manganese exploration projects. For the Espigão mining and exploration tenements, the evaluation of the polymetallic potential represents a strategic long-term change in focus."
As a result of the C&M program, there will be a reduction in the number of employees & contractors within Brazil. The Company will commercialise the remaining stocks of Mn concentrates domestically but will suspend ongoing discussions with potential new customers.
This measure is consistent with other actions the Company has implemented over the past 18 months as part of a deliberate and disciplined strategy to strengthen the Company for the long term. The Company has optimized operations, avoided selling into weak spot markets, resisted locking-in long-term sales commitments and significantly reduced costs. However, the collapse in the Mn price eroded the financial benefits of the modernization program of the last 18 months.
"To date, we have made good progress in reducing costs but unfortunately given the continued market weakness, more needs to be done", said Mr. Clark. "Meridian can't control the world market's prices for Manganese, so our focus is on positioning the Company to continue to develop its strong pipeline of projects (Espigão polymetallic and Mirante da Serra manganese) that have potentially, a wholly different set of economic parameters, while completing its local commitments."
On behalf of the Board of Directors of Meridian Mining SE
Interim CEO, President and Director
The technical information about the Company's exploration activity has been prepared under the supervision of and verified by Dr. Adrian McArthur (B.Sc. Hons, PhD. FAusIMM), the Chief Geologist of Meridian Mining, who is a "qualified person" within the meaning of National Instrument 43-101.
Meridian Mining SE is focused on the acquisition, exploration, development and mining activities in Brazil. The Company is currently focused on exploring and developing the Espigao polymetallic project, the Mirante da Serra manganese project and the Ariquemes tin exploration portfolio in the state of Rondônia, Brazil.
Further information can be found at www.meridianmining.co
Some statements in this news release contain forward-looking information or forward-looking statements for the purposes of applicable securities laws. These statements include, among others, statements with respect to the Company's plans for exploration and development of its properties and potential mineralization. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such risk factors include, among others, failure to obtain regulatory approvals, failure to complete anticipated transactions, the timing and success of future exploration and development activities, exploration and development risks, title matters, inability to obtain any required third party consents, operating hazards, metal prices, political and economic factors, competitive factors, general economic conditions, relationships with strategic partners, governmental regulation and supervision, seasonality, technological change, industry practices and one-time events. In making the forward-looking statements, the Company has applied several material assumptions including, but not limited to, the assumptions that: (1) the proposed exploration and development of mineral projects will proceed as planned; (2) market fundamentals will result in sustained metals and minerals prices and (3) any additional financing needed will be available on reasonable terms. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise except as otherwise required by applicable securities legislation.
The Company cautions that it has not completed any feasibility studies on any of its mineral properties, and no mineral reserve estimate has been established. In particular, because the Company's production decision relating to Meridian Mineraçao Jaburi S.A, manganese project is not based upon a feasibility study of mineral reserves, the economic and technical viability of the Espigão manganese project has not been established.
The TSX Venture Exchange has neither approved nor disapproved the contents of this news release. Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE Meridian Mining S.E.
For further information: Jonathan Richards, +1 604-681-0405, [email protected]