Quarterly Report • Nov 15, 2023
Quarterly Report
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THIRD QUARTER 2023
The third quarter marks a milestone in Rana Gruber's history. This quarter, we produced 503 metric tons of iron ore concentrate, compared to 469 metric tons in the same quarter last year. This represents a significant increase and marks the strongest production quarter in the company's history. What's particularly satisfying is that we manage to maintain high quality even as production volume increases, and we are taking further steps towards Fe65.
Adjusted net profit came in at NOK 171.2 million. Once again, we confirm our capability to create value for our shareholders, while positioning ourselves for the future.
I am satisfied that we had no injuries in the third quarter. Our continuous focus on safety and the dedication of our personnel have contributed to maintain a safe working environment. Safety remains our top priority.
In the third quarter, we have had a positive development in discussions with authorities regarding the proposed Bane NOR fee hikes affecting ore transport from the mines to the processing plant. The proposed fee increase for 2024 is now confirmed to be maximum NOK six million, which is substantially less than previously estimated and communicated in the stock exchange announcement in September. However, it's important to note that this matter is not concluded, and Rana Gruber remains in disagreement with the fee conditions. This is a crucial step to ensure competitive operations and cost minimisation for the future.
At last year's CMD, we addressed the initiative to insource tasks with the aim of reducing cost and improving operational flexibility. One of the most significant tasks has been setting up the organisation to manage the development of new mining levels in-house. It's a pleasure to see that our recruitment power is good, and we have now filled most of the positions for this operation. We are witnessing a gradual increase in efficiency and have great confidence that this work will provide us with a solid foundation for the development of future mining levels.
This fall, we visited all our major customers, and their feedback strengthens our belief in the direction we've chosen, which prioritises quality and sustainable processes. Simultaneously, we're making progress towards achieving Fe65, with ongoing efforts to elevate quality standards beyond Fe65. Improved quality will significantly contribute to reduce the steel industry's carbon footprint.
Toward the end of the quarter, we observed a slight increase in iron ore prices, and still weak Norwegian currency which is favourable to us. In light of higher iron ore prices, we were able to reduce uncertainty regarding
future price fluctuations by securing a portion of our sales in the end of this year and the beginning of next year. Our hedging is aimed at ensuring cash flow stability, increased predictability for the execution of our strategic projects, and maintaining a robust dividend profile. We closely monitor the market and will make ongoing assessments to ensure predictability and profitability.
Rana Gruber continues to distribute dividends to the company's investors. The board of directors decided to pay out a quarterly dividend of NOK 3.23/share for the third quarter. This means that we have distributed 70 per cent of the adjusted net profit as dividends in all the eleven quarters since the company became public.
We are optimistic about the future and have great faith in the strategic direction we've chosen for the company. In addition, we anticipate improved activity levels in the European steel industry in 2024. Alongside our strategic partners, we have strong confidence in our ability to navigate through uncertain times.
Gunnar Moe CEO of Rana Gruber ASA
| Amounts in NOK thousand, except where indicated otherwise | Q3 2023 | Q3 2022 | Change (%) | YTD 2023 | YTD 2022 | Change (%) |
|---|---|---|---|---|---|---|
| Revenue | 470 131 | 230 484 | 104.0 | 1 311 850 | 1 040 497 | 26.1 |
| EBITDA | 251 154 | 52 428 | 379.0 | 571 149 | 398 948 | 43.2 |
| EBITDA margin (%) | 53.4% | 22.7% | 30.7pp | 43.5% | 38.3% | 5.2pp |
| Net profit | 111 323 | 50 605 | 120.0 | 315 154 | 228 579 | 37.9 |
| Adjusted net profit | 171 230 | 55 423 | 209.0 | 428 755 | 246 060 | 74.2 |
| Cash cost | 228.7 | 204.6 | 11.8 | 658.6 | 629.3 | 4.7 |
| Cash cost per mt. produced (NOK) | 453 | 435 | 4.1 | 481 | 495 | (2.8) |
| EPS | 3.00 | 1.36 | 120.0 | 8.50 | 6.16 | 37.9 |
| Adjusted EPS | 4.62 | 1.49 | 208.9 | 11.56 | 6.64 | 74.2 |
Quarterly financial figures are unaudited.
For explanation of alternative performance measures, see the appendix to the interim financial statements.
Information in parentheses refers to the corresponding period in the previous year.
| Amounts in thousand metric tons, except where indicated otherwise |
Q3 2023 | Q3 2022 | Change (%) | YTD 2023 | YTD 2022 | Change (%) |
|---|---|---|---|---|---|---|
| Production concentrate | 503 | 469 | 7.3 | 1365 | 1268 | 7.6 |
| Production hematite | 476 | 442 | 7.7 | 1278 | 1195 | 7.0 |
| Production magnetite | 27 | 27 | 0.5 | 86 | 73 | 17.9 |
| Production Colorana | 1.3 | 1.1 | 11.6 | 4.6 | 3.9 | 17.6 |
| Production ore | 1 383 | 1 273 | 8.7 | 3 717 | 3 748 | (0.8) |
| Production underground (ore) | 711 | 650 | 9.4 | 1 980 | 2 013 | (1.7) |
| Production open pit (ore) | 672 | 623 | 7.9 | 1 737 | 1 734 | 0.2 |
| Production open pit (waste rock) | 1 004 | 1 007 | (0.3) | 2 072 | 3 400 | (39.1) |
| Volumes sold | ||||||
| Volume hematite | 429 | 364 | 17.8 | 1284 | 1147 | 11.9 |
| Volume magnetite | 20 | 22 | (10.1) | 76 | 66 | 14.1 |
| Volume Colorana | 1.0 | 1.4 | (28.2) | 4.0 | 4.3 | (7.9) |
The concentrate production reached 503' mt (469' mt) which is the highest quarterly production volume in Rana Gruber's history. The increase is also a continuation of the positive trend from the previous quarters. As part of Fe65, our focus forward will be on maintaining high production while increasing the quality of the product.
As announced in the second quarter, the company is experiencing an increase in tonnage in the third quarter due to higher activity in the Nordmalmen area in the summer season. This is a result of our planning to avoid costly production in the smaller pits during
the winter season. The production in Nordmalmen is expected to continue into the first half of the fourth quarter as well.
Production of hematite concentrate amounted to 476' mt (442' mt). In addition, 27' mt (27' mt) of magnetite concentrate and 1.3' mt (1.1' mt) of Colorana products were produced.
Volume sold of hematite was 429' mt (364' mt), which corresponds to seven shipments. The hematite concentrate inventory increased with approx. 50 000 mt in the quarter.
| Hematite | Magnetite | Colorana, special products | ||||||
|---|---|---|---|---|---|---|---|---|
| Q3 2023 | Q3 2022 | Q3 2023 | Q3 2022 | Q3 2023 | Q3 2022 | |||
| Revenues (NOK million) | 428 | 189 | 29 | 26 | 11 | 12 | ||
| Volumes sold (mt) | 429 192 | 364 491 | 19 661 | 21 867 | 1 016 | 1 415 | ||
| Revenues per mt (NOK) | 996 | 518 | 1 485 | 1 175 | 10 472 | 8 479 | ||
| Cash cost per mt (NOK)* | 436 | 418 | 436 | 418 | 7 365 | 7 494 | ||
| Cash margin per mt (NOK) | 560 | 100 | 1 049 | 757 | 3 108 | 986 | ||
| Margin per mt (%) | 56.3 | 19.3 | 70.7 | 64.4 | 29.7 | 11.6 | ||
| Production (mt) | 476 444 | 442 188 | 27 020 | 26 896 | 1 262 | 1 131 |
* For hematite and magnetite concentrates, the cash cost is not separated.
The hematite production yielded a margin of 56.3 per cent (19.3 per cent) per mt. The margin increase for the hematite production compared to the third quarter of 2022 is largely explained by volume sold, prices and exchange rates-effects. For more information about the booking of revenues, please see note 5 in the consolidated annual report for 2022.
The magnetite production yielded a margin of 70.7 per cent (64.4 per cent). The margin increase is largely explained by increased prices, sales mix and echange rates.
Colorana products yielded a margin of 29.7 per cent (11.6 per cent). The increase is explained by higher realised prices, sales mix, and reduced production costs.
All three product areas benefit from the strong production volumes. This allows for improved profitability and financial performance.
Rana Gruber focuses on three key strategic projects, as previously communicated. The first is related to carbon emissions from the production. The second project relates to increased product quality by lifting the iron content, and the third is to increase the magnetite production volumes.
Rana Gruber will present a comprehensive overview of CAPEX, the support arrangement, and the progress on all three projects at the Capital Markets Update on November 15th. Additionally, there will be an update on the development of a product beyond Fe65.
Rana Gruber consistently prioritises the implementation of safety measures throughout the production process, and the company is pleased to report that there were no production-related injuries or accidents leading to work absences during the quarter. This achievement shows Rana Gruber's commitment to ensure a safe working environment for all employees.
| Amounts in NOK million, except where indicated otherwise | Q3 2023 | Q3 2022 | Change (%) | YTD 2023 | YTD 2022 | Change (%) |
|---|---|---|---|---|---|---|
| Revenues | 470.1 | 230.5 | 104 | 1 311.8 | 1 040.5 | 26 |
| Raw materials and consumables used | (101.7) | (99.2) | 3 | (305.1) | (281.8) | 8 |
| Other costs | (152.6) | (116.9) | 31 | (437.6) | (376.6) | 16 |
| Change in inventory | 35.4 | 38.1 | (7) | (1.9) | 16.9 | (89) |
| EBITDA | 251.2 | 52.4 | 379 | 571.1 | 398.9 | 43 |
| Depreciation | (41.0) | (38.8) | 6 | (122.9) | (118.6) | 4 |
| EBIT | 210.2 | 13.7 | 1438 | 448.3 | 280.3 | 60 |
| Financial income/(expenses), net | (67.4) | 51.2 | (232) | (44.2) | 12.7 | (448) |
| Pre-tax profit | 142.7 | 64.9 | 120 | 404.0 | 293.1 | 38 |
| Tax | (31.4) | (14.3) | 120 | (88.9) | (64.5) | 38 |
| Net profit | 111.3 | 50.6 | 120 | 315.2 | 228.6 | 38 |
| Adjustments* | 76.8 | 6.2 | 1144 | 145.6 | 22.4 | 550 |
| Tax on adjustments | (16.9) | (1.4) | 1144 | (32.0) | (4.9) | 550 |
| Adjusted net profit | 171.2 | 55.4 | 209 | 428.8 | 246.1 | 74 |
| EPS | 3.00 | 1.36 | 120 | 8.50 | 6.16 | 38 |
| EPS adj. | 4.62 | 1.49 | 209 | 11.56 | 6.64 | 74 |
*) For explanation, please see the appendix to the interim financial statements.
Total revenues for the third quarter amounted to NOK 470.1 million (NOK 230.5 million). Third-quarter revenues this year increased compared to last year due to higher volumes sold, elevated prices for iron ore, higher realised prices than booked revenues for shipments in the previous quarter, and currency translation effects from a weakened Norwegian krone.
Cash costs ended at a total of NOK 226.7 million (NOK 193.1 million), which corresponds to NOK 453/mt produced (NOK 411/mt produced).
Operating profit (EBITDA) ended at NOK 251.2 million (NOK 52.4 million). The increase was mainly due to higher revenues. Operating costs were higher compared to the same period last year, primarily driven by increased activity related to the company's strategic projects, and inflation. The company has a proactive approach in handling its cost base through close monitoring and bringing external tasks in-house to increase profitability and operational efficiency.
Net financial expenses of NOK 67.4 million consist mainly of value adjustments of hedging of electric power, iron ore, and currency.1) In addition, net financial items include currency regulation on trade receivables and bank accounts. For more information about net financial income/expenses, please see note 6 to the interim financial statements.
The above-mentioned factors resulted in a net profit of NOK 111.3 million (NOK 50.6 million). This corresponds to earnings per share (EPS) of NOK 3.00 (NOK 1.36).
The adjusted net profit shall constitute the IFRS based net profit after tax, adjusted for unrealised gains and losses from the company's portfolio of hedging. The relevant hedging positions are those related to shipments initiated in the quarter of reporting for which the final price is concluded in the subsequent quarter. In this case, the shipments are those initiated in the third quarter for which the final price is concluded in the fourth. The board also has power of attorney to adjust for extraordinary events which do not count as being part of the company's core business.
Adjusted net profit for the quarter amounted to NOK 171.2 million (NOK 55.4 million), which gave an adjusted EPS of NOK 4.62 (NOK 1.49).
| Amounts in NOK million, except where indicated otherwise | 30 September 2023 |
30 June 2023 |
Change (%) |
31 December 2022 |
Change (%) |
|---|---|---|---|---|---|
| Total assets | 1 552 | 1 514 | 3 | 1 445 | 7 |
| Total equity | 847 | 810 | 5 | 823 | 3 |
| Equity ratio (%) | 54.5 | 53.5 | 1.0pp | 57.0 | (2.5pp) |
| Cash and cash equivalents | 271 | 348 | (22) | 213 | 27 |
| Interest-bearing debt | 178 | 174 | 2 | 138 | 29 |
Interest-bearing debt towards financial institutions consists of lease liabilities. Apart from this, the company has no long-term debt towards financial institutions. Rana Gruber has an unused credit facility of NOK 100 million.
The company's equity ratio was 54.5 per cent (53.5 per cent at 30 June 2023). Total cash holdings at the end of the quarter were NOK 271 million.
The total cash flow from the operations was positive by NOK 105.7 million (NOK 69.6 million). The deviation from EBITDA is mainly due to changes in working capital. The change in working capital is related to change in accounts receivables due to shippments late in the quarter and inventory buildup.
The capex for the period totalled NOK 95.0 million (NOK 46.0 million), of which NOK 73.0 million was development capex, mainly related to the new mining level and the Fe65 project as well as the new heating facility in the underground mine that will contribute to the decarbonisation project. NOK 22.0 million was related to scheduled maintenance.
Financing activities consisted of NOK 74.2 million (NOK 56.0 million) as pay-out of dividends and NOK 14.1 million as payment of the principal portion of the lease liabilities.
In sum, the total cash flow for the quarter was negative by NOK 77.6 million (negative NOK 39.5 million).
Throughout the quarter, iron ore prices surged, driven by increased demand from China. Year over year, iron ore imports to China have increased, while simultaneously, iron ore inventory levels at Chinese ports appear to be lower than what they have been in several years. This trend continued despite a weak and challenging real estate market in China. Meanwhile, the European steel market has been slow, making it challenging to place the produced tonnage exclusively in Europe.
The management continuously assesses the company's portfolio of hedging positions based on dialogue with and input from customers, partners, industry experts, and analysts. The hedging positions shall contribute to a sustainable and stable
cash flow, enabling future investments and compliance with the company's dividend policy. As stated in the hedging policy, hedging positions can cover a maximum of 50 per cent of the annual production volumes, and can be divided into positions for a duration of two years.
At 30 September, the company had multiple hedging positions related to both prices of iron ore and exchange rate. The total hedging positions of iron ore held by the company cover 480' mt, at an average price of USD 116/mt. Please see note 10 to the interim financial statements for further information about the hedging portfolio. After the end of the quarter Rana Gruber has secured additional 120' mt, at an average price of 116.05 USD/mt.
Rana Gruber is subject to several risks which may affect the company's operational and financial performance. These risks are monitored by the management and reported to the board on a regular basis.
The company is subject to financial and market risks related to decreases in iron ore prices and increases in freight rates. It is also subject to currency and exchange rate risk, as well as inflation risk impacting input costs.
China is the main demand driver for iron ore, and events impacting the Chinese market also impact the iron ore market.
For a more detailed description of potential risks, please see an overview in the annual report for 2022.
On 30 September, the company had 7 141 shareholders. The 20 largest shareholders held a total of 62.2 per cent of the shares.
The share was traded between NOK 54.8 and NOK 59 per share in the quarter, with a closing price of NOK 59 per share on 30 September 2023.
Pursuant to the company's adjusted dividend policy, the company aims to distribute 50-70 per cent of the adjusted net profit as quarterly dividends. The adjusted net profit shall constitute the IFRS based net profit after tax, adjusted for unrealised gains and losses from the company's portfolio of hedging. The relevant hedging positions are those related to shipments initiated in the quarter of reporting for which the final price is concluded in the subsequent quarter. In this case, the shipments are those initiated in the third quarter for which the final price is concluded in the fourth. The board also has power of attorney to adjust for extraordinary events which do not count as being part of the company's core business.
The board has the flexibility to utilise approximately 30 per cent of the estimated dividend payments to repurchase Rana Gruber shares for subsequent redemption and reduce the dividend payments correspondingly. Any buyback program to achieve the same purpose for future quarters will be announced separately.
The board has decided that a dividend of NOK 3.23 per share will be paid out for the third quarter. It will be paid out at or around 29 November. This means that the company has distributed 70 per cent of the adjusted net profit as dividends in all the eleven quarters since the company became public.
| Ex. Date | Dividend (NOK/share) |
|---|---|
| 17 November 2023 | 3.23 |
| 31 August 2023 | 2.00 |
| 15 May 2023 | 2.86 |
| 17 February 2023 | 3.00 |
| 14 November 2022 | 1.05 |
| 26 August 2022 | 1.51 |
| 16 May 2022 | 2.09 |
| 15 February 2022 | 1.51 |
| Dividend paid in 2021 | 10.31 |
Looking ahead, the European steel market remains weak, while import of iron ore to China continues to increase. Reportedly, port inventory levels in China are currently at their lowest point in several years. As a consequence of the current market dynamics in Europe and a strong production trend, Rana Gruber has decided to send two ships to Asia in the fourth quarter.
In the longer term, the market outlook for iron ore remains positive, supported by economic stimulus initiatives in China. A full recovery could however be delayed by reduced consumer confidence. Activity levels in the European steel industry are expected to be slow in 2024.
Rana Gruber is committed to carbon emissions reduction and product quality enhancement. These projects are financed through operational earnings, leases, and public support. The company is also exploring the development of direct reduction grade iron ore suitable to reduce carbon emissions in the steel industry.
In preparation for the strategic project to increase the magnetite production, there will be a scheduled one-week maintenance stop. This is expected to impact the concentrate production in the fourth quarter.
With exception of scheduled maintenance mentioned above, Rana Gruber foresees stable high production volumes, aided by resources and operational efficiency, along with the flexibility provided by our partnership with Cargill. Considering strong production, a robust customer base, and a solid financial position, the company maintains an optimistic outlook.
| Amounts in NOK thousand | Notes | Q3 2023 | Q3 2022* | YTD 2023 | YTD 2022* |
|---|---|---|---|---|---|
| Revenue | 5 | 470 131 | 230 484 | 1 311 850 | 1 040 497 |
| Changes in inventories | 35 379 | 38 081 | 1 924 | 16 877 | |
| Raw materials and consumables used | (101 737) | (99 206) | (305 073) | (281 823) | |
| Employee benefit expenses | (91 728) | (74 741) | (242 794) | (212 260) | |
| Depreciation | 7, 8 | (40 983) | (38 764) | (122 870) | (118 619) |
| Other operating expenses | (60 891) | (42 190) | (194 756) | (164 342) | |
| Operating profit/(loss) | 210 171 | 13 664 | 448 281 | 280 330 | |
| Financial income | 2 858 | 2 795 | 10 425 | 5 927 | |
| Financial expenses | (3 573) | (3 178) | (8 700) | (7 535) | |
| Other financial gains/(losses) | 6 | (66 734) | 51 598 | (45 962) | 14 328 |
| Financial income/(expenses), net | (67 449) | 51 215 | (44 237) | 12 720 | |
| Profit/(loss) before income tax | 142 722 | 64 880 | 404 044 | 293 050 | |
| Income tax expense | (31 399) | (14 274) | (88 890) | (64 471) | |
| Profit/(loss) for the period | 111 323 | 50 606 | 315 154 | 228 579 | |
| Other comprehensive income from items that will not be reclassified to profit or loss: | |||||
| Other comprehensive income/(loss) | - | - | - | - | |
| Comprehensive profit for the period | 111 323 | 50 606 | 315 154 | 228 579 | |
| Earnings per share (in NOK): | |||||
| Basic and diluted earnings per ordinary share | 3.00 | 1.36 | 8.50 | 6.16 |
*) See note 6 for further details on the restatement of the amounts shown in Raw material and consumables used, Other operating expenses and Other financial gains/(losses).
| Amounts in NOK thousand | Notes | 30 September 2023 | 30 June 2023 | 31 December 2022 |
|---|---|---|---|---|
| ASSETS | ||||
| Non-current assets | ||||
| Mine properties | 8 | 457 418 | 404 456 | 309 096 |
| Property, plant and equipment | 7 | 219 699 | 206 667 | 182 300 |
| Right-of-use assets | 175 896 | 169 413 | 137 893 | |
| Derivative financial assets | 1 902 | 6 729 | 23 151 | |
| Total non-current assets | 854 915 | 787 265 | 652 440 | |
| Current assets | ||||
| Inventories | 178 026 | 136 948 | 159 919 | |
| Trade receivables | 9 | 166 842 | 55 278 | 178 670 |
| Other current receivables | 41 214 | 52 691 | 53 635 | |
| Derivative financial assets | 9, 10 | 40 526 | 133 476 | 187 545 |
| Cash and cash equivalents | 270 780 | 348 367 | 212 837 | |
| Total current assets | 697 388 | 726 760 | 792 606 | |
| Total assets | 1 552 303 | 1 514 025 | 1 445 046 | |
| EQUITY AND LIABILITIES | ||||
| Equity | ||||
| Share capital | 9 271 | 9 271 | 9 271 | |
| Share premium | 92 783 | 92 783 | 92 783 | |
| Other equity | 744 664 | 707 511 | 720 999 | |
| Total equity | 846 718 | 809 565 | 823 053 | |
| Liabilities | ||||
| Lease liabilities | 126 482 | 123 624 | 97 199 | |
| Net deferred tax liabilities | 234 935 | 203 537 | 146 046 | |
| Provisions | 15 725 | 15 225 | 15 000 | |
| Other non-current liabilities | 2 265 | 2 265 | 2 265 | |
| Total non-current liabilities | 379 407 | 344 651 | 260 510 | |
| Trade payables | 192 507 | 176 405 | 160 614 | |
| Lease liabilities (current portion) | 51 895 | 50 429 | 40 935 | |
| Current tax liabilities | 35 114 | 35 114 | 109 029 | |
| Derivative financial liabilities | 9, 10 | 5 650 | - | |
| 2 610 | ||||
| Other current liabilities | 44 052 | 92 211 359 809 |
50 905 361 483 |
|
| Total current liabilities | 326 178 | |||
| Total liabilities | 705 585 | 704 460 | 621 993 | |
| Total equity and liabilities | 1 552 303 | 1 514 025 | 1 445 046 |
| Amounts in NOK thousand | Notes | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 |
|---|---|---|---|---|---|
| Cash flow from operating activities: | |||||
| Profit before income tax | 142 721 | 64 880 | 404 043 | 293 050 | |
| Adjustments for: | |||||
| Depreciation of tangible assets | 7, 8 | 40 983 | 38 764 | 122 870 | 118 619 |
| Unsettled loss/(gain) on derivative financial instruments | (39 818) | (79 030) | (39 818) | (79 030) | |
| Fair value change on settled derivatives | 6 | 134 555 | 68 396 | 210 696 | 95 567 |
| Net finance income / expense | 716 | 384 | 251 | 3 181 | |
| Working capital changes: | |||||
| Change in inventories | (41 078) | (55 065) | (18 107) | (44 287) | |
| Change in receivables and payables | (131 645) | 31 676 | 50 012 | 42 749 | |
| Income tax paid | - | - | (73 916) | (33 299) | |
| Interests received | 2 858 | 2 795 | 8 453 | 4 355 | |
| Interests paid | (3 573) | (3 179) | (8 704) | (7 536) | |
| Net cash flow from operating activities | 105 718 | 69 621 | 655 780 | 393 369 | |
| Cash flow from investment activities: | |||||
| Expenditures on mine development | 8 | (72 582) | (22 738) | (207 652) | (43 814) |
| Expenditures on property, plant and equipment | 7 | (22 438) | (23 672) | (67 435) | (50 787) |
| Net cash flow from investing activities | (95 020) | (46 410) | (275 087) | (94 601) | |
| Cash flow from financing activities: | |||||
| Acquisition of treasury shares | - | - | - | (14 163) | |
| Payment of principal portion of lease liabilities | (14 115) | (6 689) | (31 261) | (20 322) | |
| Dividends paid | (74 170) | (55 998) | (291 489) | (189 881) | |
| Net cash flow from financing activities | (88 285) | (62 687) | (322 750) | (224 366) | |
| Net increase/(decrease) in cash and cash equivalents | (77 587) | (39 476) | 57 943 | 74 402 | |
| Cash and cash equivalents at the beginning of the period | 348 367 | 378 241 | 212 837 | 264 363 | |
| Cash and cash equivalents at the end of the period | 270 780 | 338 765 | 270 780 | 338 765 |
| Amounts in NOK thousand | Share capital (Note 26) |
Share premium (Note 26) |
Treasury shares |
Retained earnings |
Total equity |
|---|---|---|---|---|---|
| Balance at 1 January 2022 | 9 348 | 92 783 | (2 835) | 482 515 | 581 811 |
| Profit for the period | - | - | - | 228 580 | 228 580 |
| Other comprehensive income | - | - | - | - | - |
| Total comprehensive income | - | - | - | 228 580 | 228 580 |
| Dividends paid | - | - | - | (189 882) | (189 882) |
| Acquisition of treasury shares | - | - | (14 163) | - | (14 163) |
| Share capital reduction | (77) | - | 16 998 | (16 921) | - |
| Balance at 30 September 2022 | 9 271 | 92 783 | - | 504 292 | 606 346 |
| - | |||||
| Balance at 1 January 2023 | 9 271 | 92 783 | - | 720 999 | 823 053 |
| Profit for the period | - | - | - | 315 154 | 315 154 |
| Other comprehensive income | - | - | - | - | - |
| Total comprehensive income | - | - | - | 315 154 | 315 154 |
| Dividends paid | - | - | - | (291 489) | (291 489) |
| Balance at 30 September 2023 | 9 271 | 92 783 | - | 744 664 | 846 718 |
Rana Gruber ASA is a public limited liability company incorporated and domiciled in Norway whose shares are traded on Oslo Stock Exchange. The company was established in 1964 and the registered office is located at Mjølanveien 29 in Mo i Rana, Norway.
These interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34 "Interim Financial Reporting" as adopted by the European Union (the "EU") and additional requirements in the Norwegian Securities Trading Act. This interim financial report does not include all information and disclosures required by International Financial Accounting Standards ("IFRS") for a complete set of annual financial statements. Accordingly, this report should be read in conjunction with the annual report for the year ended 31 December 2022.
The financial statements for the year ended 31 December 2022 are available at www.ranagruber.no.
These interim financial statements are unaudited.
The accounting policies applied by the company in these interim financial statements are the same as those applied by the company in its financial
statements for the year ended 31 December 2022. Because of rounding differences, numbers or percentages may not add up to the sum totals.
In the interim financial statements, the year to date 2023 (YTD 2023) is defined as the reporting period from 1 January to 30 September, and the third quarter (Q3) as the one starting on 1 July and ending 30 September.
All amounts are presented in NOK thousands (TNOK) unless otherwise stated.
The preparation of financial statements requires the management and the board of directors to make assessments and assumptions that affect recognised assets, liabilities, income and expenses, and other information provided, such as contingent liabilities. For further information concerning these, please refer to the Rana Gruber 2022 annual report.
The board has decided that a dividend of NOK 3.23 per share will be paid for the third quarter. The dividend will be paid out at or around 29 November.
The financial position and the performance of the company was not particularly affected by any significant events or transactions during the third quarter in 2023.
Income tax expense is recognised based on management's estimate of the weighted average effective annual income tax rate expected for the full financial year. The estimated average annual tax rate used for the current quarter is 22 per cent which is the same as the tax rate used for the comparable period.
The mining operations for the company is not significantly affected by any seasonality fluctuations, and the production output for the current quarter has been in line with management's operational production estimates.
Revenue arising from sources other than contracts with customers includes primarily the fair value changes in the value of the trade receivables due to the provisional price mechanisms. For further information please see note 5 in the 2022 annual report.
The following breakdown of revenue from contracts with customers presents a disaggregation by major product line:
| Amounts in NOK thousand | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 |
|---|---|---|---|---|
| Sales of hematite | 351 386 | 294 114 | 1 192 547 | 1 062 666 |
| Sales of magnetite | 29 249 | 25 720 | 111 345 | 77 538 |
| Sales of Colorana | 10 640 | 12 009 | 40 776 | 37 907 |
| Total revenue from contracts with customers | 391 275 | 331 843 | 1 344 668 | 1 178 111 |
| Effect from provisionally priced receivables | 76 150 | (105 337) | (42 280) | (154 010) |
| Other income | 2 706 | 3 978 | 9 462 | 16 396 |
| Total revenue | 470 131 | 230 484 | 1 311 850 | 1 040 497 |
| Amounts in NOK thousand | Q3 2023 | Q3 2022* | YTD 2023 | YTD 2022 |
|---|---|---|---|---|
| Net gain/(loss) on financial assets at fair value through profit or loss – derivatives on exchange rates |
6 209 | (83 468) | (59 390) | (165 115) |
| Net gain/(loss) on financial assets at fair value through profit or loss – derivatives on iron ore prices |
(43 718) | 124 368 | 23 937 | 127 468 |
| Net gain/(loss) on financial assets at fair value through profit or loss – derivatives on freight |
760 | 0 | 760 | 0 |
| Net gain/(loss) on financial assets at fair value through profit or loss – derivatives on electric power |
(21 268) | 11 526 | (25 198) | 29 144 |
| Net foreign exchange gains (losses) | (8 717) | (828) | 13 929 | 22 831 |
| Total other financial gains and losses | (66 734) | 51 598 | (45 962) | 14 328 |
*) The YTD figures presented in the Q3 2022 and YTD 2022 column has been reclassified in this Q3 2023 report. The reclassification pertains to the presentation of effects from electric power hedging instruments, with the aim of aligning the treatment of these derivatives with the company's presentation policy for other derivative instruments held for economic hedging purposes. Consequently, for Q3 2022 NOK 6 781 thousand has been reclassified from Raw materials and consumables used to Other financial gains/losses, and NOK 4 745 thousand has been reclassified from Other operating expenses to Other financial gains/losses and for YTD 2022 NOK 16 149 thousand has been reclassified from Raw materials and consumables used to Other financial gains/losses, and NOK 12 995 thousand has been reclassified from Other operating expenses to Other financial gains/losses
| Land and | Machinery | Operating | |
|---|---|---|---|
| bulidings | and plants | equipment etc. | Total |
| 46 747 | 100 056 | 6 613 | 153 416 |
| 20 860 | 41 194 | 3 644 | 65 698 |
| (5 799) | (28 374) | (2 641) | (36 814) |
| 61 808 | 112 876 | 7 616 | 182 300 |
| 108 065 | 653 060 | 60 681 | 821 806 |
| (46 257) | (540 184) | (53 065) | (639 506) |
| 61 808 | 112 876 | 7 616 | 182 300 |
| 61 808 | 112 876 | 7 616 | 182 300 |
| 11 554 | 56 497 | 1 175 | 69 226 |
| (5 039) | (24 402) | (2 386) | (31 827) |
| 68 323 | 144 971 | 6 405 | 219 699 |
| 119 619 | 709 557 | 61 856 | 891 032 |
| (51 296) | (564 586) | (55 451) | (671 333) |
| 68 323 | 144 971 | 6 405 | 219 699 |
| Land and | Machinery | Operating | ||
|---|---|---|---|---|
| Amounts in NOK thousand | bulidings | and plants | equipment etc. | Total |
| Period ended 30 June 2023 | ||||
| Opening net book amount (1 January 2023) | 61 808 | 112 876 | 7 616 | 182 300 |
| Additions | 6 426 | 37 904 | 668 | 44 998 |
| Depreciation charge | (3 356) | (15 708) | (1 567) | (20 631) |
| Closing net book amount (30 June 2023) | 64 878 | 135 072 | 6 717 | 206 667 |
| At 30 June 2023 | ||||
| Cost | 114 491 | 690 964 | 61 349 | 866 804 |
| Accumulated depreciation and impairment | (49 613) | (555 892) | (54 632) | (660 137) |
| Net book amount (30 June 2023) | 64 878 | 135 072 | 6 717 | 206 667 |
| Amounts in NOK thousand | Land and bulidings |
Machinery and plants |
Operating equipment etc. |
Total |
|---|---|---|---|---|
| Period ended 30 September 2023 (Q3) | ||||
| Opening net book amount (1 July 2023) | 64 878 | 135 072 | 6 717 | 206 667 |
| Additions | 5 128 | 18 593 | 507 | 24 228 |
| Depreciation charge | (1 683) | (8 694) | (819) | (11 196) |
| Closing net book amount (30 September 2023) | 68 323 | 144 971 | 6 405 | 219 699 |
| Mine properties: | ||||
|---|---|---|---|---|
| Exploration and | Mines under | Producing | ||
| Amounts in NOK thousand | evaluation assets | construction | mines | Total |
| Year ended 31 December 2022 | ||||
| Opening net book amount (1 January 2022) | 8 539 | - | 295 229 | 303 768 |
| Additions | 41 525 | 39 726 | 14 770 | 96 021 |
| Transfers | (41 976) | 41 976 | - | - |
| Depreciation charge | - | - | (90 693) | (90 693) |
| Closing net book amount (31 December 2022) | 8 088 | 81 702 | 219 306 | 309 096 |
| At 31 December 2022 | ||||
| Cost | 8 088 | 81 702 | 929 046 | 1 018 836 |
| Accumulated depreciation and impairment | - | - | (709 740) | (709 740) |
| Net book amount (31 December 2022) | 8 088 | 81 702 | 219 306 | 309 096 |
| Period ended 30 September 2023 (YTD) | ||||
| Opening net book amount (1 January 2023) | 8 088 | 81 702 | 219 306 | 309 096 |
| Additions | 9 513 | 173 554 | 22 797 | 205 864 |
| Transfers | - | - | - | - |
| Depreciation charge | - | - | (57 542) | (57 542) |
| Closing net book amount (30 September 2023) | 17 601 | 255 256 | 184 561 | 457 418 |
| At 30 September 2023 | ||||
| Cost | 17 601 | 255 256 | 951 843 | 1 224 700 |
| Accumulated depreciation and impairment | - | - | (767 282) | (767 282) |
| Net book amount (30 September 2023) | 17 601 | 255 256 | 184 561 | 457 418 |
| Mine properties (Q1 2023): | ||||
| Exploration and | Mines under | Producing | ||
| Amounts in NOK thousand | evaluation assets | construction | mines | Total |
| Period ended 30 June 2023 | ||||
| Opening net book amount (1 January 2023) | 8 088 | 81 702 | 219 306 | 309 096 |
| Depreciation charge | - | - | (39 712) | (39 712) |
|---|---|---|---|---|
| Closing net book amount (30 June 2023) | 12 404 | 197 852 | 194 200 | 404 456 |
| At 30 June 2023 | ||||
| Cost | 12 404 | 197 852 | 943 652 | 1 153 908 |
| Accumulated depreciation and impairment | - | - | (749 452) | (749 452) |
| Net book amount (30 June 2023) | 12 404 | 197 852 | 194 200 | 404 456 |
Additions 4 316 116 150 14 606 135 072 Transfers - - - -
| Exploration and | Mines under | Producing | ||
|---|---|---|---|---|
| Amounts in NOK thousand | evaluation assets | construction | mines | Total |
| Period ended 30 September 2023 (Q3) | ||||
| Opening net book amount (1 July 2023) | 12 404 | 197 852 | 194 200 | 404 456 |
| Additions | 5 197 | 57 404 | 8 191 | 70 792 |
| Transfers | - | - | - | - |
| Depreciation charge | - | - | (17 830) | (17 830) |
| Closing net book amount (30 September 2023) | 17 601 | 255 256 | 184 561 | 457 418 |
| Amounts in NOK thousand | 30 September 2023 | 30 June 2023 | 31 December 2022 |
|---|---|---|---|
| Debt instruments measured at amortised cost: | 335 406 | 409 374 | 296 555 |
| Other current receivables | 41 214 | 52 691 | 53 635 |
| Trade receivables not subject to provisional pricing mechanism (amortised cost) | 23 412 | 8 316 | 30 083 |
| Other non-current financial assets | - | - | - |
| Cash and cash equivalents | 270 780 | 348 367 | 212 837 |
| Debt intruments measured at fair value through profit or loss: | 143 430 | - | 148 587 |
| Trade receivables subject to provisional pricing mechanism (fair value) | 143 430 | - | 148 587 |
| Derivatives (measured at fair value through profit or loss): | 42 428 | 140 205 | 210 696 |
| Foreign exchange forward contracts | 1 960 | - | 11 380 |
| Iron ore forward contracts | 8 540 | 61 980 | 58 840 |
| Freight forward contracts | 660 | - | |
| Electric power forward contracts | 31 268 | 78 225 | 140 476 |
| Total financial assets | 521 264 | 549 579 | 655 838 |
| Amounts in NOK thousand | 30 September 2023 | 30 June 2023 | 31 December 2022 |
|---|---|---|---|
| Liabilities measured at amortised cost | 238 824 | 270 881 | 213 784 |
| Trade payables and other current liabilities | 236 559 | 268 616 | 211 519 |
| Other non-current liabilities | 2 265 | 2 265 | 2 265 |
| Liabilities measured at fair value through profit or loss: | - | (46 962) | - |
| Prepayments subject to provisional pricing mechanism | - | (46 962) | - |
| Derivatives (measured at fair value through profit or loss): | 2 610 | 5 650 | - |
| Foreign exchange forward contracts | 2 610 | 5 650 | - |
| Iron ore forward contracts | - | - | - |
| Electric power forward contracts | - | - | - |
| Total financial liabilities | 241 434 | 276 531 | 213 784 |
The different fair value measurement levels have the following meaning:
is determined using valuation techniques that maximise the use of observable market data and rely as little as possible on entity-specific estimates. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.
■ Level 3: If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the case for unlisted equity securities.
The following table presents the fair value of those assets and liabilities that are measured at fair value in the financial statements at each reporting date:
| Amounts in NOK thousand | Level 1 | Level 2 | Level 3 | Total |
|---|---|---|---|---|
| Financial assets valued at FVPL: | ||||
| Trade receivables subject to provisional pricing mechanism | - | 148 587 | - | 148 587 |
| Derivatives (assets) | - | 210 696 | - | 210 696 |
| Total financial assets measured at fair value | - | 359 283 | - | 359 283 |
| Financial liabilities valued at FVPL: | ||||
| Other liabilities subject to provisional pricing mechanism | - | - | - | - |
| Derivatives (liabilities) | - | - | - | - |
| Total financial liabilities measured at fair value | - | - | - | - |
| At 30 June 2023 | ||||
| Amounts in NOK thousand | Level 1 | Level 2 | Level 3 | Total |
| Financial assets valued at FVPL: | ||||
| Trade receivables subject to provisional pricing mechanism | - | - | - | - |
| Derivatives (assets) | - | 140 205 | - | 140 205 |
| Total financial assets measured at fair value | - | 140 205 | - | 140 205 |
| Financial liabilities valued at FVPL: | ||||
| Other liabilities subject to provisional pricing mechanism | - | (46 962) | - | (46 962) |
| Derivatives (liabilities) | - | (5 650) | - | (5 650) |
| Total financial liabilities measured at fair value | - | (52 612) | - | (52 612) |
| At 30 September 2023 | ||||
| Amounts in NOK thousand | Level 1 | Level 2 | Level 3 | Total |
| Financial assets valued at FVPL: | ||||
| Trade receivables subject to provisional pricing mechanism | - | 143 430 | - | 143 430 |
| Derivatives (assets) | - | 42 428 | - | 42 428 |
| Total financial assets measured at fair value | - | 185 858 | - | 185 858 |
| Financial liabilities valued at FVPL: | ||||
| Other liabilities subject to provisional pricing mechanism | - | - | - | - |
| Derivatives (liabilities) | - | (2 610) | - | (2 610) |
| Total financial liabilities measured at fair value | - | (2 610) | - | (2 610) |
Trade receivables subject to the provisional pricing mechanisms are considered level 2. The fair value of the provisionally priced trade receivables uses the forward prices of iron ore at the stipulated settlement date. This is an observable price with an active market, which is applied to the pricing formula for the agreements. For further information please see note 5 in the 2022 consolidated annual report.
Derivatives are considered level 2. Fair value estimates have been determined based on present value calculations and other commonly used valuation techniques. The company's derivative instruments are primarily swaps contracts where fair value estimates are based
on equating the present value of a fixed and a variable stream of cash flows over the maturity of the contract. These estimates are based on observable input related to volatility, discount rates and current market values of the underlying assets the derivative instrument is related to.
There were no transfers between levels of fair value measurements during the reporting periods.
Fair values of financial instruments not measured at fair value are not materially different to their carrying values.
Cap and floor on foreign exchange derivatives
For the relevant reporting periods, the company held the following positions in relation to derivatives to cover its foreign exchange rate
risks:
| Foreign exchange derivatives by maturity: | Sell USD (thousand) |
Floor FX rate (USD/NOK) |
Cap FX rate (USD/NOK) |
Fair value (NOK thousand) |
|---|---|---|---|---|
| Maturity within 3 months | 33 000 | 9.48 | 10.25 | (8 832) |
| Maturity within 3 to 6 months | 24 000 | 9.72 | 10.56 | 1 334 |
| Maturity within 6 to 9 months | 12 000 | 10.46 | 11.36 | 9 355 |
| Maturity within 9 to 12 months | 12 000 | 10.46 | 11.45 | 9 523 |
| Balances at 31 December 2022 | 81 000 | 9.84 | 10.68 | 11 380 |
| Foreign exchange derivatives by maturity: | Sell USD (thousand) |
Floor FX rate (USD/NOK) |
Cap FX rate (USD/NOK) |
Fair value (NOK thousand) |
|---|---|---|---|---|
| Maturity within 3 months | 15 000 | 10.45 | 11.33 | (1 448) |
| Maturity within 3 to 6 months | 15 000 | 10.45 | 11.42 | (1 560) |
| Maturity within 6 to 9 months | 13 500 | 10.34 | 11.22 | (2 642) |
| Maturity within 9 to 12 months | - | - | - | - |
| Balances at 30 June 2023 | 43 500 | 10.42 | 11.33 | (5 650) |
| Foreign exchange derivatives by maturity: | Sell USD (thousand) |
Floor FX rate (USD/NOK) |
Cap FX rate (USD/NOK) |
Fair value (NOK thousand) |
|---|---|---|---|---|
| Maturity within 3 months | 15 000 | 10.45 | 11.46 | (590) |
| Maturity within 3 to 6 months | 13 500 | 10.34 | 11.22 | (2 020) |
| Maturity within 6 to 9 months | - | - | - | - |
| Maturity within 9 to 12 months | - | - | - | - |
| Balances at 30 September 2023 | 28 500 | 10.40 | 11.35 | (2 610) |
The company has entered into forward derivative contracts, to sell USD in the market at specific exchange rates. The following table summarises the maturity of these derivative positions:
| Foreign currency forwards by maturity | Sell USD (thousand) |
Weighted average fixed rate |
Fair value (NOK thousand) |
|---|---|---|---|
| Maturity within 3 months | 12 000 | 10.67 | 394 |
| Maturity within 3 to 6 months | 6 000 | 10.75 | 794 |
| Maturity within 6 to 9 months | 6 000 | 10.72 | 772 |
| Maturity within 9 to 12 months | - | - | - |
| Balances at 30 September 2023 | 24 000 | 10.70 | 1 960 |
The company enters into forward swap derivative agreements to manage the risk of changes in iron ore prices by reference to the
pricing index TSI Iron Ore CFR China (62% Fe Fines). The following positions were held by the company in relation to the iron ore derivative instruments:
| Balances at 31 December 2022: | Quantity (metric tons) |
Weighted average fixed price (USD) |
Fair value (NOK thousand) |
|---|---|---|---|
| Derivatives already matured and recognised as other current receivables: | 50 000 | 143.69 | 18 655 |
| Matured iron ore derivatives * | 50 000 | 143.69 | 18 655 |
| Iron ore derivatives recognised as financial assets: | 240 000 | 140.45 | 58 840 |
| Maturity within 3 months | 150 000 | 137.58 | 31 506 |
| Maturity within 3 to 6 months | 90 000 | 145.23 | 27 334 |
| Maturity within 6 to 9 months | - | - | - |
| Maturity within 9 to 12 months | - | - | - |
| Balances at 30 June 2023: | Quantity (metric tons) |
Weighted average fixed price (USD) |
Fair value (NOK thousand) |
|---|---|---|---|
| Derivatives already matured and recognised as other current receivables: | 60 000 | 134.53 | 14 209 |
| Matured iron ore derivatives* | 60 000 | 134.53 | 14 209 |
| Iron ore derivatives recognised as financial assets: | 360 000 | 120.66 | 61 980 |
| Maturity within 3 months | 120 000 | 122.07 | 16 819 |
| Maturity within 3 to 6 months | 120 000 | 120.35 | 20 613 |
| Maturity within 6 to 9 months | 120 000 | 119.56 | 24 548 |
| Maturity within 9 to 12 months | 120 000 | 119.56 | 5 096 |
| Balances at 30 September 2023: | Quantity (metric tons) |
Weighted average fixed price (USD) |
Fair value (NOK thousand) |
|---|---|---|---|
| Derivatives already matured and recognised as other current receivables: | 40 000 | 122.07 | 541 |
| Matured iron ore derivatives (*) | 40 000 | 122.07 | 541 |
| Iron ore derivatives recognised as financial assets: | 480 000 | 115.57 | 8 540 |
| Maturity within 3 months | 240 000 | 116.03 | (3 024) |
| Maturity within 3 to 6 months | 180 000 | 116.59 | 9 677 |
| Maturity within 6 to 9 months | 60 000 | 110.65 | 1 887 |
| Maturity within 9 to 12 months | - | - | - |
* Matured iron ore derivatives are accounted for in other current liabilities and other current receivables and are not subject to future fair value changes.
The company entered during Q3 2023 into forward swap derivative agreements to manage the risk of changes in freight prices by
reference to the pricing index Baltic Exchange - Capesize Route C3. The following positions were held by the company:
| Balances at 30 June 2023: | Quantity (metric tons) |
Weighted average fixed price (USD) |
Fair value (NOK thousand) |
|---|---|---|---|
| Freight derivatives recognised as financial assets: | 60 000 | 20.20 | 660 |
| Maturity within 3 months | 60 000 | 20.20 | 660 |
| Maturity within 3 to 6 months | - | - | - |
| Maturity within 6 to 9 months | - | - | - |
| Maturity within 9 to 12 months | - | - | - |
The company enters into electric power price derivatives with the aim of managing the risk from electric power price fluctuations in the spot market, corresponding with the energy consumption required for the company's operations. The company manages these fluctuations by entering into forward contracts with reference to the Nord Pool prices (system price) for the expected energy consumption for future periods. The positions held at 30 September and at the end of previous periods can be summarised as follows:
| Quantity (MWh) |
Weighted average fixed price per MWh (EUR) |
Fair value (NOK thousand) |
|
|---|---|---|---|
| Maturity within 3 months | 21 590 | (87.75) | 32 209 |
| Maturity within 3 to 6 months | 21 840 | (87.75) | 26 830 |
| Maturity within 6 to 9 months | 22 080 | (87.75) | 26 223 |
| Maturity within 9 to 12 months | 22 090 | (87.75) | 32 063 |
| Maturity within 12 to 24 months | 70 272 | 26.52 | 23 151 |
| Balances at 31 December 2022 | 157 872 | (36.89) | 140 476 |
| Quantity (MWh) |
Weighted average fixed price per MWh (EUR) |
Fair value (NOK thousand) |
|
|---|---|---|---|
| Maturity within 3 months | 22 080 | (87.75) | 29 708 |
| Maturity within 3 to 6 months | 22 090 | (87.75) | 31 517 |
| Maturity within 6 to 9 months | 15 281 | (5.52) | 6 341 |
| Maturity within 9 to 12 months | 15 288 | 3.87 | 3 930 |
| Maturity within 12 to 24 months | 30 919 | 5.82 | 6 729 |
| Balances at 30 June 2023 | 105 658 | (36.89) | 78 225 |
| Balances at 30 September 2023: | Quantity (MWh) |
Weighted average fixed price per MWh (EUR) |
Fair value (NOK thousand) |
|---|---|---|---|
| Maturity within 3 months | 22 090 | (87.75) | 26 059 |
| Maturity within 3 to 6 months | 10 915 | 11.64 | 1 860 |
| Maturity within 6 to 9 months | 10 920 | 11.64 | 991 |
| Maturity within 9 to 12 months | 11 040 | 11.64 | 456 |
| Maturity within 12 to 24 months | 11 045 | 11.64 | 1 902 |
| Balances at 30 September 2023 | 66 010 | (21.62) | 31 268 |
| Amounts in NOK thousand | Party | Relationship | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 |
|---|---|---|---|---|---|---|
| Purchase of open-pit production services |
Leonhard Nilsen & Sønner AS |
Significant influence over the company |
(20 189) | (35 903) | (73 345) | (104 850) |
| Purchase of mining levels services |
Leonhard Nilsen & Sønner AS |
Significant influence over the company |
(27 413) | (23 107) | (131 431) | (43 023) |
| Sales of operations and maintenance services |
Leonhard Nilsen & Sønner AS |
Significant influence over the company |
268 | 18 | 981 | 333 |
| Sales of administrative services |
Greenland Ruby/ LNS Greenland AS |
Other related parties |
110 | 203 | 278 | 497 |
| Sales of administrative services |
LNS Mining AS | Other related parties |
0 | 618 | 412 | 1854 |
| Total related party profit or loss items | (47 224) | (58 171) | (203 105) | (145 189) |
The following significant contractual commitments are present at the end of the reporting period:
| Amounts in NOK thousand | 30 September 2023 | 30 June 2023 | 31 December 2022 |
|---|---|---|---|
| Property, plant, and equipment | - | - | 5 945 |
| Leases | 78 967 | 93 800 | 67 218 |
| Total capital commitments | 78 967 | 93 800 | 73 163 |
The board of directors is not aware of any other events that occurred after the balance sheet date, or any new information regarding existing matters, that can have a material effect on the 2023 third quarter interim financial report for the company.
The company reports its financial results in accordance with accounting principles IFRS as issued by the IASB and as endorsed by the EU. However, management believes that certain Alternative Performance Measures (APMs) provide management and other users with additional meaningful financial information that should be considered when assessing the company's ongoing performance. These APMs are non-IFRS financial measures and should not be viewed as a substitute for any IFRS financial measure. The management, the board of directors and the long-term lenders regularly use supplemental APMs to understand, manage and evaluate the business and its operations. These APMs are among the factors used in planning for and forecasting future periods, including assessment of financial covenants compliance.
EBIT is defined as the profit/(loss) for the period before net financial income (expenses) and income tax expense. The company has elected to present this APM because it considers it to be an important supplemental measure for prospective investors to understand the overall picture of the profit generation in the company's operating activities.
EBITDA is defined as the profit/(loss) for the period before net financial income (expenses), income tax expense, depreciation and amortisation. The company has presented this APM because it considers it to be an important supplemental measure for prospective investors to understand the overall picture of the profit generation in the company's operating activities.
EBIT margin is defined as EBIT in percentage of revenues. The company has presented this APM because it considers it to be an important supplemental measure for prospective investors to understand the overall picture of the profit generation in the company's operating activities.
EBITDA margin is defined as EBITDA in percentage of revenues. The company has presented this APM because it considers it to be an important supplemental measure for prospective investors to understand the overall picture of the profit generation in the company's operating activities.
Adjusted net profit is defined as profit for the period adjusted for the after-tax net effects from unrealised fair value changes on derivatives with maturity within three months from the reporting date.
Equity ratio is defined as total equity in percentage of total assets. The company has presented this APM because it considers it to be an important supplemental measure for prospective investors to understand the portion of total assets that are financed from owners' equity.
Cash cost is defined as the sum of raw materials and consumables used, employee benefit expenses and other operating expenses. The company has presented this APM because it considers it to be an important supplemental measure for prospective investors to understand the overall picture of cost of production in the company's operating activities.
Cash cost per metric ton is defined as cash cost divided by metric tons of iron ore sold. Metric tons of iron ore are defined as metric tons of hematite and magnetite produced in the current period. The company has presented this APM because it considers it to be an important supplemental measure for prospective investors to understand the overall picture of cost of production in the company's operating activities.
Net interest-bearing debt is defined as the company's interestbearing debt less cash and cash equivalents. Interest bearing debt consists of debt to credit institutions and financial leasing debt. interest-bearing debt is a non-IFRS measure for the financial leverage of the company, a financial APM the company intends to apply in relation to its capacity for dividend distribution and/or for doing investments, when and if the company will be able to carry out its dividend distribution and/or investments policy.
The table below sets forth reconciliation of EBIT, EBITDA, and EBITDA margin:
| Amounts in NOK thousand | Q3 2023 | Q3 2022* | YTD 2023 | YTD 2022 |
|---|---|---|---|---|
| Profit/(loss) for the period | 111 323 | 50 606 | 315 154 | 228 579 |
| Income tax expense | 31 399 | 14 274 | 88 890 | 64 471 |
| Net financial income/(expenses) | 67 449 | (51 215) | 44 237 | (12 720) |
| (a) EBIT | 210 171 | 13 665 | 448 281 | 280 330 |
| Depreciation and amortisation | 40 983 | 38 764 | 122 870 | 118 619 |
| (b) EBITDA | 251 154 | 52 429 | 571 151 | 398 949 |
| (c) Revenues | 470 131 | 230 484 | 1 311 850 | 1 040 497 |
| EBIT margin (a/c) | 45% | 6% | 34% | 27% |
| EBITDA margin (b/c) | 53% | 23% | 44% | 38% |
The table below sets forth reconciliation of adjusted net profit:
| Amounts in NOK thousand | Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 |
|---|---|---|---|---|
| Profit before tax for the period | 142 722 | 64 880 | 404 044 | 293 050 |
| One-offs | - | - | - | 15 000 |
| Unrealised hedging positions iron ore | 33 596 | (23 512) | 15 769 | (62 293) |
| Unrealised hedging positions FX | (3 749) | 29 688 | 20 666 | 69 704 |
| Unrealised hedging positions electric power | 46 957 | - | 109 208 | - |
| Adjusted profit before tax | 219 526 | 71 056 | 549 687 | 315 461 |
| Ordinary income tax | (31 399) | (14 274) | (88 890) | (64 471) |
| Tax on adjustments | (16 897) | (1 359) | (32 041) | (4 930) |
| Adjusted net profit | 171 230 | 55 424 | 428 756 | 246 060 |
The table below sets forth reconciliation of equity ratio:
| Amounts in NOK thousand | 30 September 2023 |
30 June 2023 |
31 December 2022 |
|---|---|---|---|
| (a) Total equity | 846 718 | 809 565 | 823 053 |
| (b) Total assets | 1 552 303 | 1 514 025 | 1 445 046 |
| Equity ratio (a/b) | 55% | 53% | 57% |
The table below sets forth reconciliation of cash cost and cash cost per metric tons:
| Q3 2023 | Q3 2022 | YTD 2023 | YTD 2022 |
|---|---|---|---|
| 281 823 | |||
| 212 260 | |||
| 164 342 | |||
| (29 144) | |||
| 228 668 | 204 611 | 658 613 | 629 281 |
| 442 | 1 195 | ||
| 73 | |||
| 4 | |||
| 504 | 470 | 1 369 | 1 272 |
| 453 | 435 | 481 | 495 |
| 101 737 91 728 60 891 (25 688) 476 27 1 |
99 206 74 741 42 190 (11 526) 27 1 |
305 073 242 794 194 756 (84 010) 1 278 86 5 |
The table below sets forth reconciliation of net interest-bearing debt:
| 30 September | 30 June | 31 December | |
|---|---|---|---|
| Amounts in NOK thousand | 2023 | 2023 | 2022 |
| Lease liabilities | 178 377 | 174 053 | 138 134 |
| Total interest-bearing debt | 178 377 | 174 053 | 138 134 |
| Cash and cash equivalents | (270 780) | (348 367) | (212 837) |
| Net interest-bearing debt | (92 403) | (174 314) | (74 703) |
Visiting address in Mo i Rana: Mjølanveien 29, Gullsmedvik NO-8601 Mo i Rana Norway
Postboks 434 NO-8601 Mo Norway
T: (+47) 75 19 83 00
Investor relations: E: [email protected]
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