VYSARN LIMITED — Interim / Quarterly Report 2014

Mar 13, 2014

T: +613 5248 2002 F: +613 5248 3498 E: info@mhmmetals.com www.mhmmetals.com

MHM Metals Limited 80 Buckley Grove Moolap VIC 3221 AUSTRALIA

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ASX Announcement

For immediate release Friday 14th February 2014

**COMMENTARY

ON
HALF
YEARLY
RESULTS**

Results
and
commentary
for
the
half-­‐year
ended
31
December
2013
("current
period")

	31-Dec-13	31-Dec-12	Change
Revenue from continuing operations	$'000 3,785	$'000 2,357	$'000 1,429
Cost of Sales	(3,040)	(3,217)	177
Gross Profit (Loss)	745	(860)	1,606
Operating Expenses	(862)	(1,999)	1,136
EBITDA	(122)	(2,859)	2,741
Depreciation	(1,050)	(1,064)	9
Impairment	(3,000)	0	(3,000)
EBIT	(4,172)	(3,923)	(249)
Income tax benefit	1,388	1,001	386
Net Profit after tax	(2,784)	(2,922)	137
Net Profit after tax (before impairment)	216	(2,922)	3,137

*The
numbers
contained
in
this
table
are
derived
from
the
Group's
consolidated
financial
statements
for the
half-­‐year
ended
31
December
2013
that
have
been
reviewed.

Earnings / (loss) per share (cents) (i)	(2.13) (2.24)	5%
Net tangible assets per share per share (cents) (ii)	8.82 10.95	-17%

(i) Weighted
average
number
of
ordinary
shares
(‘000)
-­‐
130,218

(ii) Actual
number
issued
ordinary
shares
(‘000)
-­‐
130,218

**Dividend

information**

The
company
has
not
declared
a
dividend
for
the
half-­‐year
ended
31
December
2013
(2012:
$nil).

**MHM

Metals
Limited** ABN
41
124
212
175

Registered
Office:
80
Buckley
Grove,
Moolap,
VIC
3221
|
Tel:
03
5240
8999
|
Fax:
03
5248
3498
|
E:
info@mhmmetals.com
|
www.mhmmetals.com

This
report
is
based
on
the
condensed
consolidated
financial
report
for
the
half-­‐year
ended
31
December 2013
which
has
been
reviewed
by
Deloitte
with
the
Independent
Auditor’s
Review
Report
included
in
the attached
condensed
consolidated
financial
report.

SUMMARY

MHM
Metals
Limited
(ASX:
MHM)
and
its
subsidiary
companies
(together
the
Group)
announce
the
results for
the
six
months
ended
31
December
2013.
Key
highlights
for
the
period
are:

• Sales
  revenue
  increased
  by
  61%
  to
  $3.785
  million

• Gross
  Profit
  of
  $0.745
  million
  –
  the
  first
  time
  the
  company
  has
  achieved
  this

• Operating
  expenses
  reduced
  by
  57%

• EBITDA
  loss
  of
  ($0.122
  million)
  –
  2012:
  ($2.859
  million)

• Profit
  after
  tax
  (before
  impairment)
  was
  $0.216
  million,
  an
  improvement
  of
  $3.137
  million
  from
  the 2012
  loss
  of
  ($2.922
  million)

• $1.2
  million
  cash
  at
  bank
  (excluding
  R&D
  Tax
  rebate
  $1.4
  million
  received
  January
  2014)

• No
  debt
  at
  31
  December
  2013

• Impairment
  charge
  of
  $3.0
  million
  as
  a
  result
  of
  Alcoa’s
  decision
  to
  close
  Yennora.
  The
  directors
  are presently
  performing
  a
  strategic
  review
  of
  operations
  to
  determine
  the
  Company’s
  options,
  refer
  to below.

**Overview

of
Results**

Revenue
for
the
half-­‐
year
ended
31
December
2013
at
$3.8
million,
increased
61%
as
a
result
of
higher tolling
revenue
and
higher
sales
of
NMP
(compared
to
$2.4
million
recorded
for
the
half-­‐year
ended
31 December
2012).

The
Company
made
a
gross
profit
of
$0.7
million
for
the
first
time
as
a
result
of
higher
tolling
fees
from Alcoa
and
Sims.

EBITDA
excluding
other
income
for
the
half-­‐year
to
31
December
2013
was
($0.1
million),
a
96%
increase from
($2.9
million)
at
31
December
2012,
as
a
result
of
increased
revenue
($1.4
million)
and
substantial cost
savings
of
approximately
$1.3
million.

The
Group’s
operating
cash
flow
for
the
6
months
ended
31
December
2013
was
$0.2
million,
a
$2.4
million increase
from
($2.1
million)
in
the
previous
corresponding
period
to
December
2012,
principally
due
to receipts
from
customers
(Tolling
and
NMP
sales
proceeds)
$2.2
million,
savings
in
payments
to
suppliers and
employees
$0.9
million
offset
by
R&D
tax
incentive
received
in
December
2012
$0.7
million
(R&D
tax incentive
2013
$1.4m
received
in
January
2014).

**STRATEGIC

REVIEW**

As
announced
on
18
February
2014,
Alcoa
Inc.
has
stated
that
it
will
permanently
close
its
two
rolling
mills at
Pt.
Henry,
Victoria
and
Yennora,
New
South
Wales
by
the
end
of
2014.
Currently,
the
majority
of
the
salt slag
that
MHM
processes
at
its
Moolap
plant
near
Geelong,
Victoria,
originates
from
Alcoa’s
Yennora facility.
The
permanent
closure
of
Yennora
in
itself
is
likely
to
have
a
detrimental
impact
on
the
revenues
of MHM
in
the
second
half
of
the
financial
year
ending
30
June
2015
and
thereafter
if
the
Company
is
unable to
source
alternative
processing
arrangements.
MHM
expects
to
continue
to
receive
revenue
from
Alcoa for
at
least
the
remainder
of
calendar
year
2014
and
from
NMP
sales.

**MHM

Metals
Limited** ABN
41
124
212
175

Registered
Office:
80
Buckley
Grove,
Moolap,
VIC
3221
|
Tel:
03
5240
8999
|
Fax:
03
5248
3498
|
E:
info@mhmmetals.com
|
www.mhmmetals.com

MHM’s
board
and
management
has
commenced
a
thorough
strategic
review
of
all
options
available
to
it regarding
its
Moolap
plant,
its
processing
systems,
potential
future
sources
of
salt
slag
or
other
equivalent products
and
its
assets
in
Kentucky,
USA.

Key
areas
of
the
strategic
review
include:

**Development

and
documentation
of
Moolap’s
processing
operation**

Over
the
past
18
months
the
company
has
worked
hard
to
develop
and
document
a
stable
process
that
can reduce
legacy
stockpiles,
eliminate
unsaleable
by-­‐products
and
run
the
Moolap
plant
in
a
well
managed and
controlled
manner,
all
at
a
significantly
lower
cost
per
ton.
As
is
evident
from
the
significant improvement
in
the
financial
performance
for
the
six
months
ended
31
December
2013,
the
process
is
now achieving
these
aims.
Importantly
the
Moolap
plant
is
running
far
more
consistently
and
at
levels equivalent
to
and
often
above
those
previously
achieved.
For
example,
the
average
production
for
the
last 3
weeks
was
460
tons
per
week
(normalising
for
rostered
days
off).
Management’s
focus
can
now
be directed
to
optimising
the
company’s
revised
process
through
continuous
improvements
at
the
Moolap plant
and
continuing
to
reduce
costs
associated
with
the
treatment
of
salt
slag.

**Seeking

alternative
feedstock
post
2014**

The
Company
will
actively
identify
and
pursue
all
alternative
sources
of
inbound
material
to
process through
the
existing
Moolap
plant
thereby
extending
its
working
life
well
beyond
2014.
Work
on
identifying alternative
salt
slag
supplies
is
an
essential
element
of
ongoing
business
development.
The
company
has already
identified
one
potential
alternative.
Other
alternatives
that
fall
within
this
scope
include
known, existing
salt
slag
stockpiles.

**Overseas

Expansion**

The
Company
will
examine
the
USA
landscape
and
conduct
a
feasibility
study
building
a
‘cloned’
salt
slag plant
on
its
existing
land
in
Kentucky.
Other
countries
will
also
be
included
in
this
study
to
establish
if
a Moolap
‘clone’
is
economically
viable.
The
study
will
take
into
account
both
the
current
waste
management and
landfill
situation,
abundance
of
feedstock,
distance
to
customers
of
output
materials
and
likely
future changes
to
the
environmental
landscape
in
these
jurisdictions.

**NMP

Value
Add**

The
Company
has
been,
and
will
continue,
reviewing
options
to
value-­‐add
to
the
NMP
that
it
currently produces
at
Moolap
and
that
it
can
reasonably
expect
to
produce
locally
and
at
the
other
potential
future plants
which
are
in
the
scope
of
this
strategic
review.
Work
is
currently
centred
on
ceramic
market applications.
Adding
value
to
existing
NMP
output
is
clearly
an
integral
ingredient
to
improving
plant economics
at
Moolap
and
any
overseas
expansionary
plants.

For
investor
enquiries
please
contact:

Matthew
Keen Chief
Executive
Officer (03)
5240
8999

MHM
Metals
Limited ABN
41
124
212
175

Registered
Office:
80
Buckley
Grove,
Moolap,
VIC
3221
|
Tel:
03
5240
8999
|
Fax:
03
5248
3498
|
E:
info@mhmmetals.com
|
www.mhmmetals.com