Financial Performance - IRC Limited achieved a significant milestone by recording a basic profit of $5.9 million in the first half of 2020, reversing a loss of $25.2 million from the previous year[10]. - Revenue increased from $89.2 million to $106.2 million, representing a growth of 19.0%[10]. - EBITDA surged over 150% from $13.2 million in the first half of 2019 to $33.2 million in the first half of 2020[10]. - Basic performance, excluding non-recurring/non-operating items and foreign exchange impacts, improved from a loss of $8.2 million to a profit of $5.7 million[11]. - The company reported a profit before tax of $6,372 thousand, a significant recovery from a loss of $25,932 thousand in the prior year[119]. - Net profit for the period was $5,932 thousand, compared to a loss of $25,224 thousand in the same period last year[121]. - The company reported a total comprehensive income of $7,300 thousand for the period, a recovery from a loss of $45,749 thousand in the previous year[121]. - The company reported a profit attributable to owners of the company of $5,941 thousand for the six months ended June 30, 2020, compared to a loss of $25,204 thousand in 2019[166]. Production and Sales - The company sold 1.4 million tons of iron concentrate with an iron content of 65%, an increase of 11.4% compared to the same period last year[10]. - Iron ore sales volume increased to 1,380,516 tons, a growth of 11.4% compared to 2019[33]. - K&S produced 3,142,487 tons of pre-concentrate, an increase of 20.3% compared to the same period last year, and 1,395,411 tons of iron concentrate, up 14.3% from the first half of 2019[75]. - The average realized price for iron ore was $76.8 per wet ton, up 7.6% from $71.4 per wet ton in 2019[33]. - The average price for iron ore (Fe 65%) was $105.8 per ton, comparable to $105.3 per ton in the first half of 2019[28]. Operational Efficiency - The K&S mine operated at 89% capacity during the first half of 2020, an improvement of 11% year-on-year[10]. - Cash cost decreased by 4.7% to $48.8 per ton, down from $51.2 per ton in 2019[28]. - EBITDA for the K&S mining segment rose by 51.4% to $35.9 million, with a profit of $22.5 million after accounting for depreciation and amortization costs[54]. - Operating cash flow reached $20.3 million, up from $13.1 million in the same period last year, primarily due to improved performance at the K&S mine[55]. - The unit cash cost per ton for the first half of 2020 was $48.8, indicating that K&S has not yet reached optimal levels of production[78]. Market Conditions - The iron ore price increased by 9% from $104.0 per ton at the end of 2019 to $113.6 per ton by June 30, 2020, with prices continuing to rise above $130 per ton in July and August 2020[13]. - In the first half of 2020, iron ore prices were favorable due to stable demand and supply disruptions, with Vale facing operational challenges[14]. - The Chinese government has committed to increasing infrastructure spending, leading to higher demand for iron ore due to construction projects[14]. - The iron ore benchmark price increased by 9% due to rising demand from China and supply constraints from major producers[33]. Financial Position - The company reduced its loan balance from $221.9 million at the end of 2019 to $211.9 million as of June 30, 2020, strengthening its balance sheet[10]. - The total borrowings of the group as of June 30, 2020, were $214.2 million, down from $224.6 million as of December 31, 2019, with a weighted average interest rate decreasing to approximately 7.6% from 9.7%[63]. - The company’s cash balance increased to approximately $17 million by mid-August 2020[55]. - The company believes it has sufficient liquidity to meet its financial obligations due within the next twelve months, supported by expected cash inflows from operations[136]. Strategic Initiatives - The K&S mine is expected to double its production capacity through the development of its second phase and other exploration projects[5]. - The Amur River Bridge is expected to enhance logistics efficiency and reduce transportation costs, with completion anticipated in December 2021[20]. - K&S is diversifying its customer base by selling to southern China, which may yield prices closer to benchmark prices despite higher transportation costs[15]. - The company is focused on maximizing shareholder value while ensuring sustainable business expansion[19]. - The company is actively involved in steel slag reprocessing projects, which resumed operations in 2019 but have not significantly contributed to the group's overall performance[96]. COVID-19 Impact - K&S has maintained operational safety measures in response to COVID-19, with only a few employees testing positive and most being asymptomatic[19]. - The company has implemented emergency measures to prevent the spread of COVID-19, including quarantine arrangements and medical checks, with minimal impact on operations[75]. - The company's primary customers are located in China, and demand for its products has not been adversely affected by the pandemic[136]. Governance and Compliance - The company maintained compliance with the corporate governance code as per the Hong Kong Stock Exchange regulations[111]. - The company is committed to enhancing shareholder value through responsible governance practices[111].

Production and Sales Performance - The company achieved a record iron ore production of 2.6 million tons in 2019, a 15.3% increase compared to 2018[21] - The iron ore sales volume reached 2.5 million tons in 2019[13] - K&S achieved a high production rate of approximately 95% despite the impact of COVID-19, with iron ore prices maintaining a robust level of around $100 per ton[37] - K&S's production in 2018 was 2,234,517 tons, reflecting a 43% increase from the previous year[110] - K&S aims to produce 3.2 million tons of iron concentrate with a 65% iron content annually in its first phase, with potential expansion to 6.3 million tons in the second phase[113] - In 2019, K&S processed 7,892,500 tons of ore, resulting in the production of 2,576,325 tons of iron concentrate, of which 2,464,401 tons were sold[119] Financial Performance - Revenue increased by 16.9% to $177.2 million in 2019, while EBITDA (excluding foreign exchange) rose by 39.2% to $33.3 million[21] - The company reported a net loss of $38.7 million after tax due to various non-operating items, including $11.5 million in unamortized loan costs and $6.2 million in foreign exchange losses[21] - The net revenue for the year was $177,164,000, a 16.9% increase from $151,549,000 in 2018[52] - The company reported a basic loss of $21,000,000 (10.2% increase from $19,060,000) excluding non-recurring items and foreign exchange effects[61] - The company experienced a significant hedge loss of $23,296,000 in 2019, compared to a loss of $1,585,000 in 2018, impacting overall profitability[52] - The company secured $240 million from Gazprombank for refinancing, which will ease cash flow burdens despite higher costs[48] Cost Management - The cash cost per ton remained stable at $51, despite the expansion of operational scale[21] - The average cash cost per ton increased by 2.4%, lower than the 3.1% general inflation rate in Russia[43] - The total cash cost per ton of iron ore was $51.4, up from $50.2 in 2018, representing a 2.4% increase[52] - The net cash cost per ton for iron ore increased by only 2.4% to $51.4 per ton, which is below the overall inflation rate of 3.1% in Russia for 2019[76] Market Conditions and Future Outlook - The price of iron ore with 65% iron content peaked at $136 per ton during the year, ending at $104 per ton, which is $17 higher than the end of 2018[25] - The company aims to strengthen its market position and explore growth and expansion opportunities in the future[22] - The company anticipates continued demand for high-grade iron ore, driven by supply constraints and strong market conditions[66] - The board decided not to engage in further iron ore hedging as the market remains in a contango state[48] Safety and Community Engagement - The company reported a lost time injury frequency rate of 1.04 for 2019, indicating a strong focus on employee safety and community welfare[36] - The company emphasizes safety and sustainability as top priorities, focusing on employee development and environmental responsibility[50] - The company has been actively involved in community support and charitable activities, extending its efforts to the Amur Oblast and Jewish Autonomous Oblast communities[178] - The company has implemented a zero-injury environment initiative, adhering to Russian regulations and international health and safety standards[189] Employee and Governance - The company employed approximately 1,760 employees as of December 31, 2019, an increase from 1,698 employees in 2018[105] - The company is committed to attracting and retaining high-quality employees, aiming to become a leading employer in the Russian Far East[188] - The company has a health, safety, and environment committee composed of three independent non-executive directors to evaluate the effectiveness of policies related to health, safety, and environmental risks[181] Environmental Responsibility - The company has been recognized as the first and only pure iron ore company in the Russian Far East to comply with international standard ISO 14001:2004[178] - The company has a focus on sustainable development, emphasizing safe working conditions, responsible resource use, and environmental conservation for future generations[180] - The total carbon dioxide emissions for 2019 were reported at 2,576,325 tons[174] Resource and Reserve Management - The company's resources and reserves at the end of 2019 were 1,410 million tons and 372 million tons, respectively, compared to 1,419 million tons and 387 million tons at the end of 2018[110] - The total estimated resources across all categories reached 1,410.0 million tons with an average iron grade of 29.1%, equating to 410.4 million tons of iron[146] - The company holds a 99.6% interest in the Garinskoye project, which is the largest exploration project in its portfolio[131]

Production and Sales Performance - In the first half of 2019, the company achieved a 16% increase in iron ore production compared to the same period last year[10]. - Iron ore production increased by 16.4% to 1,262,938 wet tonnes compared to 1,084,602 wet tonnes in the same period last year[22]. - Sales of iron ore rose by 18.4% to 1,239,398 wet tonnes, up from 1,046,649 wet tonnes year-on-year[22]. - The K&S project operated at 93% of its capacity in June 2019, achieving a monthly production record[9]. - K&S produced 1,262,938 tons of iron concentrate and sold 1,239,398 tons during the first half of 2019, with a total of 3,889,400 tons of ore processed[66]. - K&S operated at an average capacity of 93% in June 2019, breaking monthly production records, while maintaining stable operations at approximately 80% capacity during the first half of 2019[63]. Financial Performance - Revenue increased by 27% to $89.2 million, driven by favorable iron ore market prices[10]. - The total revenue for the group was $89.2 million, a 27.2% increase from $70.2 million in the previous year[22]. - Revenue from iron ore reached $88.5 million, a 26.6% increase from $69.96 million in the previous year[22]. - The K&S mine's revenue for the first half of 2019 was $88.5 million, reflecting a 26.6% increase due to higher sales volumes and prices[33]. - The company reported a net loss attributable to shareholders of $25.2 million, a 61.4% increase from $15.6 million in the same period last year[28]. - The company reported a loss before tax of $25,932 thousand, compared to a loss of $15,301 thousand in the previous year, indicating a 69.5% increase in losses[92]. - The net loss for the period was $25,224 thousand, compared to a net loss of $15,637 thousand in the prior year, representing a 61.5% increase in losses[92]. - Basic and diluted loss per share was $(0.36) for the six months ended June 30, 2019, compared to $(0.22) for the same period in 2018[92]. Cost Management - Cash costs decreased by 3.5% from $51.7 per ton in the first half of 2018 to $49.9 per ton in 2019[10]. - The net cash cost per ton sold decreased by 3.5% to $49.9, with processing and fixed production costs per ton reduced by 8.6% and 3.7% respectively[39]. - Mining and operating expenses rose to $65.9 million in H1 2019, up 17.5% from $56.1 million in H1 2018, while sales volume increased by 18.4%[37]. - The company maintained a focus on controlling administrative costs, with general administrative expenses remaining flat at $5.1 million despite inflation[44]. Market Outlook - The outlook for the iron ore market remains cautiously optimistic, with increasing demand driven by infrastructure projects in China[18]. - The company is prepared to meet market demand for iron ore through increased production and a strong project pipeline[18]. Debt and Financing - The refinancing of the Industrial and Commercial Bank of China loan was completed in March 2019, marking a significant milestone for the company[12]. - As of June 30, 2019, the group's borrowings totaled $234.8 million, up from $223.7 million at the end of 2018, with a weighted average interest rate of 9.7%[58]. - The group entered into a financing agreement with Industrial and Commercial Bank of China for a total loan amount of $340 million for the K&S project[198]. - The group fully repaid the outstanding loan principal and interest to Industrial and Commercial Bank of China on March 19, 2019, terminating the financing agreement[199]. - The group entered into two loan agreements with Gazprombank JSC totaling $240 million, with a maturity date in December 2026[200]. Accounting Standards - The company has applied the new Hong Kong Financial Reporting Standards (HKFRS) No. 16 for the first time, which replaces HKAS 17 and related interpretations[114]. - The application of HKFRS No. 16 has resulted in significant changes in accounting policies, particularly in the recognition of lease liabilities and right-of-use assets[116]. - The impact of the new accounting standards on the financial position and performance of the company has not been significant for the current and prior periods[114]. Employee and Operational Metrics - The group employed approximately 1,667 employees as of June 30, 2019, with total employee costs amounting to $12.3 million[58]. - K&S's safety monitoring showed progress with a lost time injury rate of 1.45 for the first half of 2019, compared to zero in the same period of 2018[69]. Project Developments - The company is exploring various projects to increase and confirm exploitable reserves, aiming to enhance value when market conditions improve[85]. - The Amur River Bridge project is expected to reduce transportation costs by up to $5 per ton for K&S, enhancing its position as a low-cost iron ore producer[72]. - The Garinskoye project has a potential annual production capacity of 1.9 million tons with an iron grade of 55% and an operational lifespan of 8 years[83].

Production and Capacity - In 2018, the total production increased by 43% compared to the previous year, with K&S operating at an average capacity of 84% in December 2018, breaking monthly production records[29]. - K&S is expected to reach full production capacity of 3.2 million tons per year, with potential expansion of annual capacity by 40% to 4.5 million tons[29]. - K&S is currently operating at approximately 86% capacity and is preparing for full capacity operations[29]. - K&S produced 2,234,517 tons of iron concentrate in 2018, a 43% increase from 1,563,066 tons in 2017, demonstrating significant operational transformation[90]. - K&S's processing plant operated at 70% capacity in 2018, reaching 84% in December, breaking monthly production records[93]. - K&S achieved an operational capacity of approximately 70% in 2018, with plans to further increase capacity in future phases[90]. Financial Performance - The net profit recorded was $68.2 million, with EBITDA increasing by 42% to $28.5 million[28][29]. - Total revenue reached $151.5 million, a 38.7% increase compared to the previous year[45]. - EBITDA increased by approximately 42.1% to $28.5 million, driven by revenue growth and tighter cost control[37]. - The company achieved a net profit of $68.2 million, a decrease of 39.8% compared to the previous year[45]. - The refinancing arrangement with Gazprombank aims to repay approximately $169 million in loans, enhancing financial stability[37]. - The company recorded an EBITDA of $33.0 million for the production segment, an increase from $27.9 million in 2017[60]. Costs and Expenses - The cash cost per ton for 2018 was $50.2, reflecting a 3.7% increase, consistent with an overall inflation rate of about 3% in Russia[29]. - Cash costs rose slightly by 3.7% to $50.2 per ton, despite higher mining costs and inflation in Russia[37]. - The total operating expenses and service costs for the K&S mine rose to $140.7 million in 2018, compared to $96.2 million in 2017, due to expanded operational scale[55]. - The total employee cost for 2018 was $24.0 million, an increase from $21.7 million in 2017, with approximately 1,515 employees as of December 31, 2018[85]. - The average cash cost per ton of iron concentrate slightly increased by 3.7% to $50.2 in 2018, while processing costs decreased by 12% due to improved efficiency at K&S[90]. Market and Geopolitical Factors - The geopolitical challenges faced in 2018 included risks from the US-China trade war and Brexit, impacting the commodity market[29]. - The global steel market remains tight, particularly in India, Africa, and ASEAN regions, which may influence demand for steel products[34]. - The average exchange rate of the ruble against the US dollar depreciated to 63 rubles per dollar in 2018, positively impacting the group's operating profit due to the cost structure being primarily in rubles and revenue in dollars[34]. Strategic Initiatives - The company aims to maintain K&S as one of the lowest cost producers of 65% iron content iron ore while continuing to control costs[29]. - The company is conducting a strategic review to consider the reopening of the Kuranakh mine, driven by recent positive price movements and stable commodity markets[34]. - The company aims to leverage nearly 40 years of experience in the commodity business to unlock its true potential[34]. - The company is evaluating a capital expenditure of approximately $50 million to upgrade the first-phase production facility to increase annual capacity to about 4.6 million tons[93]. Environmental and Safety Standards - The company maintained a zero-accident policy, with the lost time injury rate decreasing to 0 incidents in 2018 from 1 in 2017[90]. - The company emphasizes a zero-injury environment and adheres to Russian regulations and international health and safety standards[168]. - The company has implemented a comprehensive health and safety management system across all operating companies, reflecting international best practices[185]. - The company aims to minimize the environmental impact of its operations through significant actions and adherence to environmental laws[195][196]. Employee and Community Engagement - The company aims to become a leading employer in the Russian Far East and is focused on attracting and retaining high-quality employees[167]. - The company conducted health and safety training for all employees every six months, ensuring compliance with Russian regulations and international standards[185]. - The company is focused on reducing the impact of its operations on local indigenous communities and supporting their sustainable development[196]. - The company has established various employee conduct codes and internal labor behavior regulations to comply with labor laws[180].