Some good answers here from MMC's IR, except for the last one:
Setting aside transportation costs, why didn't MMC realize any substantial production cost per tonne economies of scale (from efficiency gains and fixed cost leverage) in the first half of 2017?
Over the past several years the Company was able to cut cost level quite substantially. Due to challenging market condition and low coal prices some taxes and contractors fees were low during 2015-2016. As result of improved market condition those taxes and fees slightly increased compared to same period of the last year.
If royalty costs are captured in cost of good sold, what costs are included in selling and distribution costs? What drove the 5-fold increase in this category for the interim period relative to the comparable period last year?
The selling and distribution costs is the costs related to inland China sales such as fees and charges, logistics, transportation and other costs. The increase was mainly due to increased sales volume compared to same period of last year.
Besides receivables growth, what caused MMC to only convert USD $28M of its USD $72M in profit from operations into operating cash flow? Are the contributing factors permanent or will MMC's cash conversion improve going forward?
The main difference is pre-striping activity. As per accounting standard it’s booked as fixed assets. So the cash flow related to pre-stripping activity is classified into investing activity. Also this year the Company recorded USD30.2m of debt restructuring costs which was sourced from internal cash generation.
If additions to property, plant and equipment were USD $29.5M for the first six months of 2017, what accounts for the USD $52M increase in Net Property, Plant and Equipment on the balance sheet between December 31, 2016 and June 30, 2017?
The operating subsidiary of MMC is registered in Mongolia. And the property of the operating subsidiary is booked in MNT (Mongolian official currency - tugrik). As such, due the exchange rate difference the increase was recorded during the reporting period.
In today's filing, the company indicated that it collected USD $5.122 million in revenues from the sales of 0.4 Mt of middlings. These figures imply an average selling price of middlings of only USD $13 per tonne. I was under the impression that thermal coal sold at an ASP of roughly USD $30. If that is the case, why was the ASP for middlings so low for the first half of 2017?
Middlings is not our main product, it’s a byproduct to HCC. There is no cost accrued on the middlings.
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