IRC Limited (1029) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. Welcome to the conference call. Our Chairperson today is Johnny, please be in your call, and I'll be [indiscernible] The Q&A. Thank you.

Thank you, Rachel. Good afternoon, everyone. I'm Johhny Yuen, I'm the Finance Director and Company Secretary of IRC. I would like to welcome all of you to our company's conference call. for the 2026 Interim Results Announcement of IRC Limited. Apart from me, with us today, we have our CEO, Mr. Denis Cherednichenko; and our CFO, Mr. Danila Kotlyarov. [Operator Instructions] As a reminder, this conference is being recorded. [indiscernible] And powerful slides for use in this call have been uploaded, and you can download those documents from our website at www.ircgroup.com.hk. [Foreign Language] It's now my pleasure to turn the call over to our CEO, Denis. Denis, can you start, please.

Good morning, good afternoon, dear investors and the shareholders. In this half year, periods been one of the significant strategic execution and operational progress. The ramp out of the Sutara mine site continues to be a cornerstone of our success. Is this so deliver substantially [indiscernible]. So please go to the slide #5 for the presentation and some key financial highlights. The gross revenue rose to $153.4 million mainly due to a 17% increase in sales volume. Cash cost came down, [indiscernible] Decreased by or 4.9%. But due to the RUB appreciation, cash cost at down in U.S. dollars terms increased by 7.8%. Adjusted EBITDA of $11.6 million and the underlying profit of $0.7 million. Cash balance is $35.3 million, and net cash is $21.2 million. So as a production on sales, you can see the production volume increased by 16.9% to 1, 664 kilotonnes, and sales volume also decreased by 17%. So against [indiscernible] it is due to successful development and ramping up of Sotera. And so also due to our own mining fleet in operation. And now I want to pass the word to Danila Kotlyarov. Danila please.

Thank you, Denis. Ladies and gentlemen, I would like to give you just a quick update on the results. So can you look at the next slide, please. So I will basically [indiscernible] To what Denis mentioned already. So as you can see here in terms of the volumes of production and volume of sales have a significant increase again in the 6 months of the last year. This is mainly a result of the excellent job of our team in terms of of improving the capacity and the efficiency of the K&S plant and gather multiplied with increase in the quality and [indiscernible] Properties of the Sutara or we have achieved a good result of increasing the production as also increasing lots of sales. In terms of the selling price, 6 months of this year were in terms of the iron ore prices were -- or were in a good development. So there was -- we've seen the increase in the price increase in the prices in the beginning of the year. At this point of time, the prices are in a bit of a decline. But in the first like 6 months, there were higher than with all of them last year. So -- which also helped us to boost the amount of sales. The negative, you're talking about the macro parameters in first -- or 6 months, we were impacted negatively with the RUB exchange rate. There were surprising appreciation of the RUB exchange rate quite significant. As you can say here on why it would will affect -- which affected our costs, yes. And the result in dollar terms, we have a quite significant pace, and increase in the cash cost of K&S. Although if you look at the RUB cost, we actually -- we were -- so the costs weren't decrease, which was a result of the of the increase of the product volumes, which allow to decrease the unit cost on the number of savings which we have achieved in almost all the process in production. And this allowed us to compensate partly the negative effect of the RUB appreciation because we -- as we mentioned previously, almost all of our denominated [indiscernible] . As a result of this, we have -- so the group EBIT in 6 months in the amount of USD 12 million, which is significant off top of what was last year, so despite the negative effect for the ruble. Nowhere else I can mention, here. So in terms of the capital expenditures, they are a little bit on top of what we had last year. So we keep on completing the CapEx at Sutara project, although we are aiming to complete all the works for Sutara, almost all the work at Sutara this year. So we commissioned successfully and its full operational so crushing screening plant in Sutara as Sutara mine and we commissioned partly the mine equipment, although the blasting plant, we are planning to commission in quarter 3 of this year. So we're looking ahead on some [indiscernible] until the year-end. So we can move to the next slide, but basically, I can -- I will not repeat what I mentioned already. So as you can see here in terms of the absolute numbers, we have increased in revenue, which is a reflection of the increased volumes of the production, obviously, we have the corresponding increased in the total amount of the cost. In terms of the G&A, we have a positive dynamics, which reflects in our aim to have a lean approach to our G&A cost and cost in general. So we are trying to decrease that and we are doing what we can to be as lean as possible. So Ralph here is probably -- we can look on the next slide where we have the balance sheet, which is basically the reflection of of our capital program. And we can mention the main like notable difference here is the full repayment of the loan. We are basically -- we have 0 debt at the moment, in terms of the banking debt. So we we completed the rights issue at the beginning of the year and perceived that we have been used on repayment -- for repayment of the loan, as we were planning and also funding of our capital investment. On the next -- for with the cash flow, as you can see here in terms of cash in operations, we had we basically breakeven. There was a slight decrease in the -- so the outflow in relation with the accounts [indiscernible] Both but it actually was because our amount of trade receivables at the end of the year were record low. And during the first like 6 months of the year, the returns like to a normal turnover level of about a month or a few weeks. And so currently, so this is reflected in a negative outflow. Yes, the rest reflects what I mentioned already, full repayment of MIC loan and capital investments. In terms of the cash cost, probably it's worth like noting here that the major item in terms of the production process was increased in the cost of mining. But it was -- it partly was the effect of the increase in the stripping ratio. When we begin to mine like Sutara mine, last year, the stripping ratio was quite low. So this year, it's more normalized like to long-term level. And also there was an accounting accounting impact because we have utilized about 1 million tonnes of the stockpiles of the ore, which is good because it is reflected in the decrease of [indiscernible]. Although these like stockpiles were mined in the previous years at a high cost, and that's why we have year-on-year, we had increase in [indiscernible]. So the rest of the -- on the cost, they basically increased in line with -- so it's not only the impact of the inflation, but there is impact of the significant depreciation of the RUB. But as I said, we basically achieved a lot of savings and as a result, so -- if you look at the production cost, if you look at the processing costs, they are basically based on par with the last year because we were able to to yield the negative effect of the loan appreciation. Next slide, I can probably shall mention that, yes, as I mentioned, we fully repaid the loan. So we have levered that, but we have on our balance sheet lease liabilities with the reflection of our rental agreements on some of the mining equipment, which were used because main mine fleet, which we operate in, basically, it's leased on the base of the rental agreements in accordance with the IFRS requirements, we are capitalizing these lease liabilities on our balance sheet. Although in terms of the banking loans, we have no indebted. So yes, I think that's all we wanted to update you with. And we are happy to to move to Q&A.

Yes, Rachel, can you put us to Q&A, please?