Group underlying EBITDA of EUR 134 million for the first nine months of 2018, a decrease of 17% on the first nine months of 2017, primarily due to a 15% decrease in the benchmark zinc treatment charge, a weakening of the USD against the EUR (1.11 to 1.19), increased energy prices in Europe and higher direct operating costs at the mining operations, partially offset by a higher average zinc price (USD 2,783/t to USD 3,020/t) and increased zinc metal and zinc in concentrate production (up 4% and 22% respectively)
Metals Processing underlying EBITDA of EUR 145 million, down EUR 17 million period-on-period, driven primarily by lower treatment charges and higher energy prices in Europe and Australia during Q3 2018, partially offset by higher commodity prices, increased zinc, lead and by-product production; and
Mining underlying EBITDA of EUR 27 million, down EUR 6 million period-on-period, driven by the negative EBITDA contribution from the restart of the Myra Falls mine and weak production and operating cost performance at the Langlois and Middle Tennessee mines, partially offset by higher commodity prices, lower treatment charges and continued operating improvements at the East Tennessee mines
Balance sheet and liquidity
Net debt excluding zinc metal prepay and perpetual securities of EUR 1,137 million at the end of September 2018, a decrease of EUR 61 million from 30 June 2018, predominantly due to working capital inflow due to lower commodity prices. Net debt inclusive of zinc metal prepay and perpetual securities of EUR 1,449 million at the end of September 2018, a decrease of EUR 39 million on 30 June 2018
Committed liquidity pool of EUR 631 million at the end of September 2018
Free Cash Flow positive by EUR 24 million for the first nine months of 2018 versus negative FCF of EUR 472 million in FY 2017
Port Pirie Redevelopment continues to ramp-up in-line with management's expectations
Continuous quarterly operational improvements in 2018 with record performance achieved during Q3 2018 on volume of material treated and proportion of high margin residue in feed (residue in feed and TSL throughput of 60% and 75kt respectively compared to 54% and 48kt in Q2 2018)
EBITDA for 2018, 2019 and 2020 at current macros is re-affirmed to be in-line with previous guidance, expected EBITDA of at least EUR 40 million, EUR 100 million and EUR 130 million respectively
Myra Falls restart is progressing well with zinc production having commenced during September 2018 and first shipment of zinc in concentrate is expected to take place in Q4 2018
Nyrstar bought back and cancelled EUR 10 million of September 2019 senior notes at a discount to par and continues to review the various capital structure options available to refinance the upcoming 2019 maturing financial liabilities
Trafigura remains a supportive shareholder
Commenting on the third quarter 2018 interim management statement, Hilmar Rode, Chief Executive Officer said: "Over the course of the third quarter, Nyrstar was exposed to adverse market conditions that led to a profit warning on 20 September 2018 and poor financial results for the group with an Underlying EBITDA of EUR 13 million for Q3 2018. The sharp decline in the zinc price over the course of Q3 2018 (down by 22% compared to the H1 2018 average) compounded by historically low zinc treatment charges, increased energy prices in Europe and Australia, the restart expense of the Myra Falls mine and poor operating cost performance at our Middle Tennessee and Langlois mines produced a disappointing earnings result for the group. On a positive note, Nyrstar's operations delivered increased production of all major commodities year-over-year.
After two years of substantial and important capital investments in large projects such as the Port Pirie Redevelopment and restarts of the Middle Tennessee and Myra Falls mines, primarily driving large negative Free Cash Flow of EUR 514 million and EUR 472 million in 2016 and 2017 respectively, the Company has achieved an important milestone in the first nine months of 2018 with a Free Cash Flow positive position of EUR 24 million. On the basis of the current operating environment and the performance of our operations, we expect that the Company will end 2018 in a Free Cash Flow positive position.
We remain focussed on delivering our operational strategy. The Port Pirie Redevelopment continues to ramp-up on schedule and on current macros is expected to deliver a material EBITDA of at least EUR 40 million, EUR 100 million and EUR 130 million in 2018, 2019 and 2020 respectively; our five zinc smelting operations remain consistent performers and have not experienced any material unplanned outages in 2018; and all four of our mines are now in operation and will benefit from a fixed forward hedge of c. USD 3,000/t in 2019. The macro outlook for 2019 is also more promising, with the availability of zinc concentrate increasing and expectations of a materially higher zinc concentrate benchmark treatment charge.
The end of quarter committed liquidity position was EUR 631 million and we will update the market as we progress with our plans to address the upcoming 2019 maturing financial liabilities."
Management will discuss this statement in a conference call with the investment community on 30 October 2018 at 9:00am Central European Time. The presentation will be webcast live and will also be available in archive. The webcast can be accessed via https://edge.media-server.com/m6/p/3i393v6o
For further information please visit the Nyrstar website: www.nyrstar.com