APAC successfully raised gross proceeds of HK$550 million to provide additional working capital via a placement of 1,100,000,000 shares in April 2010.
APAC Resources Limited (“APAC”), a natural resources investment and commodity business company with subsidiaries in Hong Kong and Shanghai, announced on Wednesday, its financial results for the eighteen months ended 30 June 2011.
Despite the commodities market downturn in 2011, APAC delivered solid performance for the eighteen month period ended 30 June 2011 with net profit of HK$1,462,069,000, mainly driven by the attributable profits from Primary Strategic Investment at HK$866,247,000. The profit from Resource Investment was HK$150,399,000. Commodity Business profit was at HK$138,011,000.
Mr. Andrew Ferguson, Chief Executive Officer and Executive Director of APAC, said “Given the volatility of the resources sector in the first half of 2011, we are pleased to report stronger than expected results, driven by the surge of attributable profits from our Primary Strategic Investments. The maiden dividend of A$0.04 per share to be distributed by Mount Gibson will contribute nearly HK$90,000,000 in cash, further strengthening our financial position.”
With improved profitability in all business segments, our net profit attributable to owners was at HK$1,104,447,000 (2009: HK$372,603,000), translating to a 196% increase. Attributable profits from our Primary Strategic Investments of HK$536,379,000 (2009: HK$118,028,000) represents a 354% increase. Resource Investment portfolio posted a net gain of HK$350,025,000 (2009: HK$124,702,000), representing an increase of 181%. Commodity Business achieved a net profit of HK$125,772,000 (2009: HK$46,092,000), representing an increase of 173%.
2011 1H net profit after tax was HK$357,622,000 (2010 1H: HK$143,382,000) mainly driven by the attributable profits from our Primary Strategic Investments of HK$333,403,000 (2010: HK$172,407,000), up 93% from 2010 1H. However, this was offset by the underperformance in Resource Investment of HK$199,626,000 loss (2010 1H: loss of HK$106,334,000), up 88% from 2010 1H. Commodity Business profit was HK$12,239,000 (2010 1H: HK$75,837,000).
APAC’s two Primary Strategic Investments are Mount Gibson Iron Limited (“Mount Gibson”) and Metals X Limited (“Metals X”), both located in Australia.
Mount Gibson, the fifth largest iron ore producer in Australia, produces iron ore from Koolan Island and the Tallering Peak mines in Western Australia. Its current production capacity is 7 million tonnes per year, and is to increase to 10 million tonnes in 2011 when the new Extension Hill mine starts production, according to an APAC Resources report.
Metals X is an Australian-based emerging diversified resource group with a primary focus on tin via its 50% interest in the producing Renison mine in Tasmania, and nickel via its world scale Wingellina development. Metals X also has a portfolio of strategic investments, giving it significant exposure to copper, gold, nickel, zinc and bauxite.
APAC believes that its primary strategic investments are well positioned under the uncertain investment climate, as both Mount Gibson and Metals X are in production with strong net cash balances, while Kalahari controls a premium uranium asset. For the resource investment segment, the Group intends to be selective in adding positions and focus on commodities which are in short supply within China such as iron ore, uranium and copper. Remaining positive about the commodity market given the ongoing imbalances between supply and demand, the Group is continuing the negotiation with Mount Gibson regarding an iron ore off-take agreement of its new Extension Hill mine and expect to receive a greater share of the Koolan Island off-take after Mount Gibson cancelled its agreements with other companies. The Group looks forward to continuing to evaluate emerging opportunities and is confident in the natural resources markets for the forseeable future.
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