Prosperity Minerals Holdings Limited, which operates a cement manufacturing business in the People’s Republic of China and an iron ore trading business serving the same market, today announces its results for the six months ended 30 September 2008. All figures are expressed in US dollars unless otherwise stated.
In terms of funding and expansion of operations, the company arranged the issue of US$100m Loan Notes with attached Warrants in May 2008 to finance the expansion of its cement operations. Prosperity completed the acquisition of a 40% interest in Guangzhou K. Wah Nanfang Cement Company Limited (Guangzhou Nanfang) in April 2008. Prosperity completed the acquisition and investment in a 30% interest in Yunnan Kungang & K. Wah Cement Construction Materials Co. Limited (Anning) in May 2008 .
The company also completed the acquisition and investment in a 30% interest in Boashan Kungang & K. Wah Cement Construction Materials Co. Limited ("Baoshan") in July 2008.
Prosperity commenced initial investment in the greenfield projects in Chongqing Direct Municipal City and Dengta City, Liaoning Province II. Cement operations.
Yingde Dragon Mountain Cement Company Limited ("YDM"):
Tonnage of cement and clinker sold at YDM was broadly in line with the same period last year although increasing production costs, particularly coal, reduced profitability. Segment results for the six months ended 30 September 2008 were 34% lower at $5.2m (2007: $7.9m). The results include professional and administrative charges of approximately $1m relating to the cement expansion plan and an operating cost of approximately $400,000 for the PRC regional headquarters established this
year to manage the Group’s newly acquired operations. YDM was affected by unusually poor weather conditions in the summer, reduced activity around the Beijing Olympics and a weakened cement market in Guangdong during the period. Coal expenses increased to 61% of the cost of sales during the six months ended 30 September 2008, up from 46% during the same period last year Prosperity Conch Cement Company Limited (PCC):
PCC operated in the same challenging environment as YDM during the period. Planned plant upgrades required temporary shut downs in April and May 2008
At the Anhui Chaodong Cement Company (ACC) performance was affected by the shut down of a clinker production line, of 0.25Mta, due to technical difficulties. Construction of the first new clinker line, of 1.8Mta designed saleable capacity, at Chao Hu is on schedule and is expected to be completed by the end of 2008 .
At Guangzhou Nanfang operating results have improved since Prosperity completed its investment and appointed new management. As planned, the grinding facility sourced clinker principally from YDM. Guangzhou Nanfang was also affected by the weakened cement market in Guangdong Province during the period.