Financial Performance - In the first half of 2024, the company reported a basic loss of approximately $10.8 million, a significant decline compared to a basic profit of $9.3 million in the same period last year[6]. - Revenue decreased by approximately 19.3% from about $139.2 million to $112.3 million due to a significant drop in sales volume[8]. - The company reported a negative EBITDA of $1.7 million in 2024, compared to a positive EBITDA of $28.5 million in 2023[8]. - EBITDA excluding non-recurring items and foreign exchange for the first half of 2024 was a loss of $1.735 million, compared to a profit of $28.453 million in the same period of 2023, marking a decline of 106.1%[22]. - The company reported a loss of $13.2 million for the first half of 2024, with a basic loss of $10.8 million after excluding non-recurring items and foreign exchange effects, reflecting a 216.2% increase from a profit of $9.3 million in the same period last year[24]. - The company reported a cumulative loss of $1,062,545 thousand as of June 30, 2024, compared to $1,049,306 thousand as of December 31, 2023, reflecting an increase in cumulative losses[95]. - The company reported a total comprehensive loss for the six months ended June 30, 2024, was $66,836 thousand, compared to $65,749 thousand for the same period in 2023, indicating a slight increase in losses[95]. Production and Sales - K&S operated at an average capacity of about 72%, producing 1,132,201 tons of iron concentrate, a decrease of 13.5% from 1,308,821 tons in the previous year[6]. - Iron ore production and sales for the first half of 2024 were 1,132,201 tons and 1,118,750 tons, respectively, representing declines of 13.5% and 18.6% compared to the same period in 2023[17]. - Sales volume for K&S in the first half of 2024 was 1,118,750 tons, down 18.6% from 1,374,549 tons in the previous year[25]. - The company faced challenges with ore quality and mining efficiency, leading to a 37.0% decrease in mining volume, while the processing plant's feed only decreased by 5.7% due to the use of accumulated low-quality ore stock[25]. - K&S aims to produce 3.2 million tons of iron concentrate with a grade of 65% annually in the first phase, with potential expansion to 6.3 million tons in the second phase[60]. Costs and Expenses - The cash cost per ton increased by approximately 25.4% from $77.7 to $97.4 in the first half of 2024, driven by inflation and rising mining costs[8]. - The company faced significant increases in production costs due to high mining costs, temporary export taxes from Russia, and high inflation rates[21]. - Cash costs net (excluding transportation) increased by $22.1 per ton to $81.9 per ton, primarily driven by high mining costs due to higher average mining volumes of lower-quality ore[31]. - The net cash cost (including transportation) rose by 25.4% to $97.4 per ton, influenced by increased mining costs, new export taxes, and strong inflation[35]. - General administrative expenses before depreciation decreased by 8.9% to $5.1 million compared to $5.6 million in the same period last year[36]. - Financing costs decreased by 18.4% to $3.3 million, attributed to increased cash balances generating more interest income and reduced loan principal[39]. Cash Management and Liquidity - The company is currently facing difficulties in cash management due to complex funding issues and rising operational costs[7]. - As of June 30, 2024, the cash balance decreased to $39.4 million from $56.6 million as of December 31, 2023, and net debt increased to $23.9 million from $11.2 million[10]. - The company is focused on maintaining financial stability and managing cash resources effectively in response to ongoing market volatility and high inflation pressures[15]. - The company plans to explore potential solutions to enhance liquidity to manage current uncertainties in the market[15]. - The company reported a net cash outflow of $1.2 million for the six months ended June 30, 2024, attributed to decreased sales and increased operating costs[47]. Geopolitical and Operational Challenges - The geopolitical environment and sanctions against Russia have created significant operational challenges and uncertainties for the company[9]. - The company acknowledges the challenges posed by geopolitical issues, which complicate strategic planning and operational decisions[15]. - The company continues to monitor the impact of sanctions from the UK, EU, and US, which have not had a significant direct effect on operations to date[99]. - The company is actively assessing risks related to supply chain disruptions due to geopolitical factors and macroeconomic conditions[99]. Future Plans and Projects - The Sutara mine is anticipated to improve operational efficiency and extend the overall mining life by providing higher quality ore, with operations expected to commence in the second quarter of 2024[9]. - The company is actively exploring the establishment of its own mining team to reduce reliance on third-party contractors, which is expected to enhance operational efficiency[6]. - The company has initiated stripping and mining operations at the Sutara mine, which is expected to provide a long-term solution to the ore quality issues[25]. - The company is considering additional wet magnetic separation stages to produce ultra-high-grade iron ore with 68% iron content, enhancing project value[69]. Shareholder and Corporate Structure - As of June 30, 2024, the company has issued 8,519,657,257 shares, with Nikolai Levitskii holding 4,836,157,937 shares, representing 56.76% of the total[72]. - Public shareholders held 43.24% of the company's shares following the completion of the offer on February 22, 2024[81]. - On February 22, 2024, MIC invest LLC sold its entire equity interest in the company, and Axioma became the ultimate parent company[128]. - The company had no stock options granted during the six months ending June 30, 2024, under the stock option plan[78]. Miscellaneous - The company is involved in the mining and metallurgy sector, focusing on resource estimation and feasibility studies[134]. - The report indicates that all amounts are in US dollars unless otherwise specified[134]. - The company has a comprehensive board structure, including various committees such as audit, remuneration, and health, safety, and environment[137].

Financial Performance - Revenue decreased to $112.3 million, down 19.3% from $139.2 million in the same period last year, primarily due to an 18.6% decline in sales volume[2] - EBITDA (excluding non-recurring items and foreign exchange) was negative $1.7 million, a significant drop from a positive $28.5 million in the same period last year[6] - Basic loss attributable to shareholders was $13.2 million, compared to a loss of $65.7 million in the previous year, reflecting a 79.8% improvement[4] - The company reported a loss of $13.2 million for the first half of 2024, with a basic loss of $10.8 million excluding non-recurring items and foreign exchange effects, reflecting a 216.2% increase from a profit of $9.3 million in the same period of 2023[8] - The company reported a net loss of $(13,226) thousand, significantly improved from a net loss of $(65,749) thousand in the prior year, representing an 80.1% reduction[43] - Basic and diluted loss per share improved to $(0.16) from $(0.77) year-over-year[42] Production and Sales - Production decreased by 13.5% to 1,132,201 tons, compared to 1,308,821 tons in the previous year, attributed to ore quality and mining issues[4] - Sales volume fell to 1,118,750 tons, down 18.6% from 1,374,549 tons in the previous year, consistent with the production decline[4] - Iron ore production decreased by 37.0% to 1,132,201 tons in the first half of 2024, down from 1,308,821 tons in the same period last year, while sales volume fell by 18.6% to 1,118,750 tons[9] - K&S reported a commercial iron ore production of 1,132,201 tons in the first half of 2024, down 13.5% from 1,308,821 tons in the same period of 2023[90] Costs and Expenses - Cash costs increased to $97.4 per ton sold, up 25.4% from $77.7 per ton in the previous year, driven by high mining costs and temporary export taxes[4] - Cash costs per ton increased by approximately 25.4% to $97.4 from $77.7, driven by rising inflation and mining costs[39] - General administrative expenses before depreciation decreased by 8.9% to $5.1 million from $5.6 million in the same period last year[17] - Depreciation expenses for the first half of 2024 were $5.6 million, a decrease of 42.4% from $9.8 million in the previous year[19] Debt and Financing - Net debt increased to $23.9 million from $11.2 million, primarily due to reduced profitability and difficulties in bank fund transfers[2] - The total borrowings from MIC as of June 30, 2024, amounted to $63.3 million, down from $67.7 million as of December 31, 2023[32] - The company's debt-to-equity ratio decreased to 22.7% as of June 30, 2024, compared to 23.3% as of December 31, 2023, due to reduced borrowings after loan repayments[34] - The weighted average interest rate on borrowings for the first half of 2024 was 8.78%, slightly up from 8.65% in the same period of 2023[32] Operational Challenges - Future outlook remains challenging due to low iron ore prices and high inflation, impacting profit margins and profitability[3] - The company is facing challenges in pricing power due to competition from local producers and has noted a trend of steel mills opting for lower-grade and cheaper iron ore[12] - The company is actively addressing ore quality issues and has upgraded processing facilities to handle lower-grade ores more effectively[9] - The company is facing ongoing challenges from geopolitical factors and sanctions affecting operations in Russia, complicating cash management and operational stability[40] Projects and Developments - The company is progressing with the Sutara project, which aims to improve ore quality and extend the overall mining life of K&S[3] - Mining operations at the Sutara site are expected to improve production capacity due to higher-grade iron ore, with stripping and mining activities commenced in Q2 2024[9] - The Sutara mine is expected to enhance operational efficiency and extend the overall mining period, with stripping and mining operations having commenced in Q2 2024[41] - K&S is exploring two feasible development options for the Garinskoye project, with one option targeting an annual capacity of 4.6 million tons and a mine life of over 20 years[95] Cash Flow and Liquidity - Cash and bank balances decreased to $45.151 million as of June 30, 2024, down from $56.557 million at the beginning of the year[25] - Cash balance decreased to $39.4 million as of June 30, 2024, down from $56.6 million on December 31, 2023, while net debt increased to $23.9 million from $11.2 million[40] - The company reported a net cash flow from operating activities of $(1,395) thousand, a decrease from $32,523 thousand in the same period of 2023[48] - The company reported total cash and cash equivalents balance of $38,890 thousand as of June 30, 2024, down from $44,930 thousand a year earlier[48] Market Conditions - The average price of iron ore with 65% Fe content was $130.7 per ton, a decrease of 1.0% from $132.0 per ton in the previous year[4] - The average inflation rate in Russia was 9.2% as of June 2024, significantly above the central bank's target of 4%[15] - The company continues to monitor the impact of sanctions from the UK, EU, and US, which have not had a significant direct effect on operations to date[51] Employee and Governance - The company employed 1,579 people as of June 30, 2024, down from 1,629 employees a year earlier, with total employee costs amounting to $17.4 million[36] - The company’s management compensation for the six months ending June 30, 2024, totaled $2,296,000, a decrease from $2,765,000 in the same period of 2023[83] - The company has adopted corporate governance principles and complies with the listing rules of the Hong Kong Stock Exchange[102]

Financial Performance - The company reported a basic profit of $8.7 million for the fiscal year ending December 31, 2023, despite facing multiple challenges[16]. - The company recorded a basic profit of $8.7 million, a decline of 65.1% year-on-year, and reported a loss of $156.8 million after adjustments[38]. - The company achieved an EBITDA of $278.8 million for the fiscal year 2023, reflecting a significant increase compared to previous years[11]. - EBITDA for the iron ore segment decreased by 18.4% to $45.8 million in 2023 due to reduced sales volume and falling prices[43]. - The group reported a basic EBITDA of $45.8 million for 2023, a decrease from $56.1 million in 2022, primarily due to lower realized prices, reduced production, and increased costs[123]. - The net loss attributable to the company was $156.8 million in 2023, influenced by impairment losses and non-recurring items[63]. - The company recorded an impairment provision of $163.9 million for 2023, with an additional $90.3 million in H2[44]. - The company reported a basic profit of $8.7 million, but a significant non-cash asset impairment of $163.9 million led to a total loss of $156.8 million for 2023, compared to a loss of $87.9 million in 2022[93]. Production and Sales - K&S produced 2,466,829 tons of iron ore, a decrease of 4.0% compared to 2022, with sales of 2,528,596 tons, down 1.5%[32]. - The total iron ore production for 2023 was 2,466,829 tons, a decrease of 4.0% from 2,569,845 tons in 2022[54]. - The sales volume for iron ore in 2023 was 2,528,596 tons, down 1.5% from 2,566,480 tons in 2022[54]. - The realized price per dry ton of iron ore was $108 in 2023, an 8.5% decrease from $118 in 2022[54]. - Production and sales in 2023 declined by 4% and 1.5% respectively compared to the previous year, with K&S operating at approximately 78% of average capacity[136]. Financial Position and Debt - Cash reserves increased from $36.9 million at the end of 2022 to $56.6 million at the end of 2023, enhancing the company's financial position[16]. - The net debt to EBITDA ratio improved to 0.24 in 2023, indicating a stronger financial position[11]. - The net debt decreased, contributing to improved liquidity and overall financial stability for future growth opportunities[16]. - The company's net debt decreased significantly to $11.2 million by the end of 2023, down from $41.6 million in 2022[114]. - The debt-to-EBITDA ratio improved to 0.24 in 2023, compared to 0.74 in 2022, reflecting a substantial reduction in net debt[114]. Operational Challenges - The company faced operational challenges due to the depletion of resources at the Kimkan mine, impacting production and profitability[16]. - The operational efficiency has declined due to the depletion of the Kimkan mine and the transition period before the Sutara mine begins operations[22]. - The company faced operational challenges due to heavy rainfall in summer 2023, affecting production efficiency[33]. - The company faced operational challenges including poor ore quality and equipment supply issues, impacting production rates[65]. Market Conditions - The geopolitical risks and rising operational costs have negatively impacted iron ore prices, posing challenges for the company[16]. - In Q1 2023, iron ore prices surged by 26.1% to $140 per ton due to optimistic demand recovery in China[39]. - In Q2 2023, iron ore prices fell by 11.4% to $124 per ton as supply recovery outpaced demand[39]. - The average price of iron ore for the year was $132 per ton, a decrease of 5.0% compared to 2022[39]. - China's economic recovery is pivotal for iron ore demand, influencing market prices significantly[48]. Cost Management - Cash costs per ton remained stable at $78.9, despite rising operational costs and inflation pressures[42]. - Cash costs (excluding transportation) increased by 18.2% to $62.9 per ton in 2023, primarily due to rising government-set electricity prices and fuel costs[57]. - Transportation costs decreased by approximately 37.5% to $16.0 per ton in 2023, offsetting some of the increases in other cost components[57]. - The average cash cost per unit increased due to a decline in production, increased transportation distances, and stripping ratios, although the weakening of the Russian ruble benefited cash production costs[134]. Future Plans and Developments - The company plans to expedite the development of the Sutara mine to mitigate the impact of delays in production from the Kimkan mine[20]. - The successful operation of the Sutara project is critical for increasing production and controlling costs, with a planned start in mid-2024[47]. - The Sutara project is expected to begin operations in the first half of 2024, with an estimated initial capital expenditure of approximately $50.4 million, of which $29.2 million has already been incurred[139]. - The company plans to fully utilize low-quality ore stockpiles in 2024, which were previously required to be used over a longer period[33]. Environmental, Social, and Governance (ESG) Initiatives - The company is committed to sustainable development and has implemented revised mining plans to enhance production capacity[20]. - The company has established specific environmental, social, and governance (ESG) goals that are reviewed annually by the board[199]. - The company aims to enhance its resource management strategies, focusing on sustainable practices in mining operations[196]. - The company emphasizes stakeholder engagement in its ESG initiatives, integrating feedback into its strategies and plans[196]. Employee and Safety Metrics - As of December 31, 2023, the group employed 1,636 employees, a decrease from 1,804 in 2022, with total employee costs amounting to $28.8 million, down from $35.7 million in 2022[118]. - The lost time injury rate for 2023 was reported at 1.08 per 1,000,000 hours worked, an increase from 0.66 in 2022, indicating a need for improved safety measures[123]. - The company aims to maintain high safety standards and implement a zero-accident policy across all operations[134].

Financial Performance - The company reported a basic profit of $8.7 million but incurred a significant non-cash asset impairment of $163.9 million, resulting in a net loss of $156.8 million for 2023, compared to a loss of $87.9 million in 2022[46]. - Operating profit before changes in working capital was $43.3 million in 2023, down from $61.7 million in 2022, mainly due to a decrease in EBITDA[50]. - The company generated a net cash inflow from operating activities of $63.3 million in 2023, compared to a cash outflow of $32.7 million in 2022[50]. - The company reported a revenue decline of 9.2% to $253.0 million for the fiscal year ending December 31, 2023, compared to $278.8 million in 2022[66]. - Basic profit for the year was $8.7 million, a decrease of 65.1% from $25.0 million in 2022[66]. - The company recorded a net loss attributable to shareholders of $156.8 million, up 78.4% from $87.9 million in 2022, primarily due to a non-cash impairment of $163.9 million[66]. - EBITDA decreased to $45.8 million, down 18.4% from $56.1 million in the previous year[66]. - The company reported a total revenue of $252.987 million from various products and services, down from $278.757 million in 2022, a decline of 9.2%[172]. Debt and Liabilities - Total borrowings as of December 31, 2023, amounted to $67.321 million, a decrease from $78.058 million in 2022, representing a reduction of approximately 13.3%[12]. - The company has a net debt to EBITDA ratio requirement of less than 3.0 times, which has been adhered to since June 30, 2022[13]. - The debt service coverage ratio must be no less than 1.2 times, with the company having received waivers for this requirement from its major shareholder, MIC invest LLC[17]. - Total liabilities reached $85,951 thousand in 2023, up from $61,055 thousand in 2022, marking an increase of 40.6%[15]. - The net debt decreased significantly to $11.2 million by the end of 2023, down from $220.3 million in 2019, showing a substantial improvement in financial leverage[190]. - The net debt to EBITDA ratio improved from 0.74 in 2022 to 0.24 in 2023, reflecting enhanced financial stability[190]. Shareholding and Corporate Governance - The company maintained a public shareholding of 52.7% as of December 31, 2023, down from 58.5% in 2022, indicating a decrease of 5.8 percentage points[5]. - Axioma Capital FZE LLC acquired 401,812,360 shares, representing approximately 4.72% of the company's issued share capital, for a total consideration of HKD 47,413,858.48, equivalent to HKD 0.118 per share[32]. - Axioma's total shareholding increased to 30.61% post-acquisition, up from 25.89% prior to the transaction[32]. - The company confirmed compliance with the corporate governance code and has not violated any standards during the year[21]. Production and Operations - The production rate for K&S is calculated based on an annual capacity of approximately 3,155 thousand wet metric tons[38]. - Production volume fell by 4.0% to 2,467 thousand tons, primarily due to poor ore quality and mining issues[66]. - Iron ore production decreased by 4.0% to 2,466,829 tons in 2023, down from 2,569,845 tons in 2022[74]. - The company is preparing to commence mining operations at the Sutara mine in the first half of 2024[66]. - The company aims to maximize the potential of the Sutara mine and is investing significant resources to ensure its timely operation[69]. Costs and Expenses - Cash costs, excluding transportation, increased by 18.2% to $62.9 per ton due to rising operational costs[76]. - General administrative expenses before depreciation decreased by 32.6% year-on-year to $9.9 million due to the absence of one-time discretionary bonuses and payments to directors in 2023[104]. - The company recorded a total operating expenditure of $200.3 million and capital expenditure of $17.0 million in 2023, totaling $217.3 million[55]. Market Conditions and Risks - The company faced foreign exchange risk due to transactions denominated in foreign currencies, primarily the Russian ruble, and has no current hedging positions against the ruble[59]. - The average inflation rate in Russia for 2023 was approximately 7.4%, contributing to increased operational costs[98]. - The Russian ruble depreciated significantly in 2023, averaging 85 rubles per dollar, impacting the cost structure positively for K&S[101][102]. Future Outlook - The company anticipates 2024 to be the most challenging year, as it is currently in a transitional phase due to the depletion of the Kimkan mine and awaiting the start of operations at the Sutara mine[129]. - Future success depends on three key factors: successful operation of Sutara, recovery of the Chinese economy, and the ability to control operational costs[147]. - The company expresses confidence in its long-term development potential and has recently increased its shareholding to reflect this commitment[130].

Production and Sales Performance - K&S's production rate increased to 83% of design capacity, producing 1,308,821 tons of iron concentrate, a 4.0% increase year-on-year[15] - Sales volume grew by 7.6%, with 1,374,549 tons of iron concentrate sold during the reporting period[15] - Production increased by 4.0% to 1,308,821 tons, while sales rose by 7.6% to 1,374,549 tons[36] - K&S achieved a production increase of 4.0% year-over-year during the reporting period, despite operational interruptions[157] - The commercial iron concentrate production for the first half of 2023 was 1,308,821 tons, up 4.0% from 1,258,847 tons in the same period last year[158] Financial Performance - Average price of iron ore with 65% iron content was $132 per ton in the first half of 2023, a significant drop of 20.0% compared to the same period last year, leading to a 16.0% decline in revenue to $139.2 million[5] - EBITDA decreased by 45.0% to $28.9 million due to a decline in iron ore prices, despite a 7.6% increase in sales volume[41] - The company reported a net loss of $65.7 million for the first half of 2023, influenced by non-recurring items and foreign exchange[45] - Basic earnings, excluding non-recurring items and foreign exchange, were reported at $9.3 million, reflecting a 76.2% decrease from the previous year[44] - Iron ore sales revenue decreased by 16.0% to $139.2 million in the first half of 2023, compared to $165.7 million in the same period of 2022, despite a 7.6% increase in sales volume[58] - The group reported a loss of $65.7 million for the first half of 2023, an improvement from a loss of $77.9 million in the same period of 2022, mainly due to an impairment loss of $73.6 million on the carrying value of K&S and other assets[115] Cost Management - Transportation costs per ton increased by over 20%, but total cash costs per ton remained consistent with 2022 due to increased rail transport[6] - Cash costs per ton remained stable, with costs excluding delivery to customers rising by 24.6% to $59.8[36] - Cash costs (excluding transportation) increased by $11.8 per ton to $77.7 per ton in the first half of 2023, compared to $78.6 per ton in the same period of 2022[66] - The average cash cost of mining increased due to high inflation rates in Russia, particularly in electricity prices and wages[64] - The company anticipates a positive impact on costs in the second half of 2023 due to the depreciation of the ruble[178] Strategic Initiatives - The company is focusing on operational efficiency and sustainable practices to adapt to the volatile business environment caused by weak iron ore prices and inflation[4] - The Sutara mine is expected to commence operations in the first half of 2024, despite some delays in design document approvals[3] - The company is actively seeking opportunities for business and product diversification to enhance shareholder value[1] - The company plans to enhance its production capacity by potentially adding processing equipment and developing other exploration projects[11] - The company plans to continue exploring and participating in new business opportunities to mitigate risks associated with focusing on a single product[26] Market and Economic Conditions - The company faced challenges from the Russia-Ukraine conflict and global inflation, impacting production costs significantly, including nearly doubling electricity costs[6] - The strategic location of K&S allows it to serve the Chinese market effectively, benefiting from improving Sino-Russian relations[3] - The company faced challenges in the Russian market due to competition and pricing pressures, leading to minimal shipments to Russia in the first half of 2023[76] - The company will continue to monitor macroeconomic conditions and adjust its marketing strategies accordingly[76] - The group is closely monitoring the impact of sanctions from the UK, EU, and the US, which have not had a significant direct impact on operations to date[139] Corporate Governance - The management and board of directors are committed to maintaining good corporate governance to protect shareholder interests and enhance the group's performance[200] - The group believes that an open and responsible business approach, along with adherence to good corporate governance practices, can bring long-term benefits to the group and its shareholders[200] - Detailed disclosures of the company's corporate governance policies and practices can be found in the annual report for the fiscal year ending 2022[200] Employee and Operational Metrics - The group employed 1,629 people as of June 30, 2023, down from 1,773 employees a year earlier, with total employee costs amounting to $17.0 million[152] - K&S maintained a high safety level with a lost time injury rate of 2.26 during the reporting period, compared to 1 incident in the same period of 2022[138] Future Outlook - K&S aims to produce 3.2 million tons of iron concentrate with a grade of 65% annually, with the first phase of the project expected to commence mining in 2024[133] - The K&S project has a total resource of 577 million tons and a total reserve of 322 million tons, with a mine life exceeding 30 years[133] - The company is reviewing plans to advance the DSO project, which has a potential annual production of 1.9 million tons[184] - The company is actively involved in exploration projects aimed at discovering new resources and increasing confirmed exploitable reserves[186]

Impairment Loss - The company recognized an impairment loss of approximately $103.2 million for the year ended December 31, 2022[4]. - The impairment loss includes approximately $94.6 million related to the K&S mine's property, plant, and equipment[4]. - The company reported a total impairment of approximately $8.4 million for certain mining assets under construction due to lack of future construction plans[4]. - The impairment loss was recognized in the profit and loss statement for the year ended December 31, 2022[14]. - The company plans to provide additional information regarding the impairment loss for shareholders and investors[10]. - The financial results and impairment details were disclosed in the company's annual report for the year ended December 31, 2022[10]. K&S Mine Performance - The recoverable amount of the K&S mine's assets was estimated at approximately $433.3 million as of December 31, 2022, compared to a carrying amount of approximately $527.9 million[14]. - The average annual production at the K&S mine decreased from 3,176 thousand tons in 2021 to 3,126 thousand tons in 2022[6]. - The company applied the income approach for the valuation of the K&S mine, which is commonly used for mineral assets[12]. - The increase in country risk premiums in Russia and China contributed to a rise in the discount rate used for calculating the K&S mine's cash flow[11]. Economic Indicators - The average price of Platts 65% iron ore was recorded at $131 per ton, a decrease of $9 compared to December 31, 2021[16]. - The nominal pre-tax discount rate increased to 15.66% from 13.48% year-over-year, reflecting changes in market data and risk premiums[16]. - The actual pre-tax discount rate is expected to be 13.39%, up from 11.15% in the previous year, reflecting increased capital costs[16]. - The average exchange rate of the Russian ruble against the US dollar is projected to be 68 in 2023, compared to 75 in 2022[16]. - Inflation rates are expected to be 2.27% in 2023 and 2.33% in 2024, indicating a slight increase in economic pressure[16]. - The average price forecast for iron ore is set at $112.5 for 2028 and beyond, with a consistent decline expected in the short term[16]. - The average exchange rate for the ruble is projected to rise to 85 from 2025 to 2027, indicating a potential depreciation of the currency[16]. - The company anticipates continued downward pressure on iron ore prices in the short term due to market conditions[16]. - The consensus economic forecasts have been adjusted based on new assumptions regarding iron ore prices and inflation rates[17]. Miscellaneous - The company maintains that all other information in the announcement and the 2022 annual report remains unchanged[18].

Financial Performance - In the first half of 2023, the average price of iron ore with 65% iron content decreased by 20% compared to the same period last year, impacting overall performance [2]. - Despite a 7.6% increase in sales volume, total revenue fell by 16.0% from $165.7 million in the first half of 2022 to $139.2 million in the first half of 2023 [9]. - EBITDA decreased to $28.9 million, reflecting the challenging market conditions [2]. - The company reported a basic profit of $9.3 million, which is a more accurate reflection of its underlying performance, despite a reported loss of $65.7 million due to non-recurring items and foreign exchange [7][21]. - For the six months ended June 30, 2023, the company reported a loss of $65.7 million, compared to a loss of $77.9 million for the same period in 2022, primarily due to an impairment loss of $73.6 million on K&S and other assets [42]. - Revenue from external customers for the six months ended June 30, 2023, was $165.6 million, a decrease from $165.7 million in the same period of 2022 [49]. - The group reported a loss before tax of $60.4 million for the first half of 2023, compared to a loss of $80.2 million in the same period of 2022 [49]. - The net loss for the six months ended June 30, 2023, was $65,749 thousand, an improvement from a net loss of $77,942 thousand in the prior year [138]. - The basic loss per share for the period was $0.77, compared to $1.10 for the same period in 2022 [136]. Cost and Expenses - Cash costs per ton (excluding transportation) increased by $11.8 to $59.8 per ton, driven by high inflation in Russia, particularly in electricity and labor costs [12]. - The average cash cost per ton, including transportation, was $77.7, slightly lower than the previous year's $78.6 [13]. - General administrative expenses before depreciation decreased by 44.4% compared to the previous year, primarily due to one-time payments to management [18]. - Operating expenses, including depreciation, totaled $122.7 million for the six months ended June 30, 2023, slightly down from $126.9 million in the prior year [51]. - The financing costs increased by 5.6% to $4.4 million in the first half of 2023 due to rising market interest rates [54]. - The depreciation expense for the first half of 2023 was $9.8 million, a decrease of 13.3% compared to the same period in 2022 [36]. Production and Capacity - K&S maintained an average production capacity of approximately 83%, producing 1,308,821 tons of iron ore concentrate, a 4.0% increase year-on-year [23]. - The company produced 1,308,821 tons of iron concentrate during the reporting period, an increase of 4.0% year-over-year, while sales volume rose by 7.6% to 1,374,549 tons [94]. - K&S's iron ore production increased by 9.7% to 4,584,800 tons for preliminary processing compared to the first half of 2022 [191]. - K&S faced a production halt for about one week due to external power grid issues in May 2023, but managed to resolve the issue by the end of the month [186]. Impairment and Asset Management - The company recognized an impairment charge of $73.6 million for K&S and other assets during the first half of 2023, reflecting a decline in the price of iron ore [40]. - The recoverable amount of property, plant, and equipment for the K&S project was approximately $360.3 million as of June 30, 2023, down from $433.3 million as of December 31, 2022, resulting in an impairment loss of $74.306 million during the period [117]. - The company reported a net impairment loss of $73,575 thousand for the six months ended June 30, 2023, down from $112,987 thousand in the previous year [136]. Cash Flow and Liquidity - Operating cash flow for the first half of 2023 was $35.3 million, down from $47.9 million in the same period of 2022 [45]. - Cash and cash equivalents increased by $8.3 million to $45.2 million in the first half of 2023, enhancing the company's liquidity position [86]. - The company reported a cash flow hedge gain of zero for the six months ended June 30, 2023, compared to a gain of $5,656,000 in the prior year, highlighting a significant change in hedging effectiveness [1]. - Cash and cash equivalents at the end of the period were $44,930,000, down from $75,775,000 year-over-year, reflecting a decrease of approximately 40.7% [1]. Debt and Financing - The group's debt-to-equity ratio increased to 19.1% as of June 30, 2023, up from 17.4% at the end of 2022, primarily due to impairment provisions [65]. - The total debt of the group as of June 30, 2023, was $73.1 million, down from $78.5 million as of December 31, 2022, indicating a reduction in leverage [75]. - The company has pledged 2,120,000,000 shares of common stock as collateral for its borrowings, which were released on February 27, 2023 [112]. - The company’s borrowings from MIC invest LLC amounted to $72,698,000 as of June 30, 2023, down from $78,058,000 at the end of 2022, indicating a reduction in debt levels [1]. Strategic Initiatives and Future Outlook - The company is actively pursuing business expansion initiatives, including the purchase and subsequent sale of vessels, to diversify its operations and reduce risks associated with focusing on a single product [87]. - The company is focused on developing the Sutara mine, with expectations for it to commence operations in the first half of 2024, despite some delays in design document approvals [115]. - The company continues to monitor macroeconomic conditions and adjust its marketing strategies accordingly due to ongoing instability in the market [24]. - The company is actively seeking opportunities to diversify its business and product offerings to enhance shareholder value and capitalize on emerging market trends [114]. Employee and Operational Metrics - As of June 30, 2023, the company employed 1,629 people, a decrease from 1,773 employees on June 30, 2022, with total employee costs amounting to $17.0 million, down from $19.5 million in the previous year [93]. - The company maintained a high safety level with a lost time injury rate of 2.26, compared to 1.37 in the previous year, indicating a need for further safety improvements [1].

Safety and Health - The company recorded a lost time injury rate of only 0.66 per 1,000,000 hours worked in 2022, aiming for zero injury rate[12] - The company conducts annual health and safety training for all employees, ensuring compliance with Russian regulatory requirements and international best practices[8] - The company emphasizes the importance of a safe working environment, with all employees receiving health and safety training during onboarding[8] - The company has established a comprehensive industrial safety and labor protection management system to comply with labor protection and industrial safety regulations[10] - The company regularly performs risk assessments and operational safety audits to monitor and improve its operations[9] - The company conducts regular health checks for employees working in hazardous conditions to prevent occupational diseases[15] Environmental Management - The company has implemented an environmental action plan to improve environmental management efficiency and ensure the safe use of natural resources[22] - The company adheres to and often exceeds Russian legal standards and international best practices in its environmental policies[24] - The company encourages suppliers and contractors to follow its environmental and safety policies[18] - The company has designed a list of measures to achieve its environmental goals set for 2022, focusing on energy conservation and environmental safety[22] - The company is actively engaged in environmental monitoring, ensuring all data remains within regulatory limits[38] - The company has implemented measures to reduce carbon and sulfur emissions due to the lower content in hard coal compared to brown coal[44] - The company is focused on optimizing waste management and protecting biodiversity in its operational areas[56] - The company has identified and systematized sources of harmful pollutants as per new environmental regulations[68] Waste and Emissions - The total direct greenhouse gas emissions amounted to 57,856 tons, a 0.2% increase from 57,735 tons in 2021[41] - The total emissions from fixed sources increased by 8.6% to 3,923 tons in 2022 due to the development of new facilities, particularly the Kimkan West mine[64] - The total amount of inert waste generated in 2022 decreased by 3.7% to 52,143,030 tons, including 42,528,920 tons of cover layer, 2,772,770 tons of dry tailings, and 6,841,340 tons of wet tailings[80] - The company recycled 7,521,399 tons of waste in 2022, with 91% being wet tailings waste[85] - The total hazardous waste generated in 2022 was 3,257 tons, with a density ratio of 0.001 tons/ton[83] - The efficiency of industrial emissions treatment at the heating plant was 94%[67] - The company implemented energy-saving measures at the 10 MW heating plant, reducing coal usage during summer[66] Water Management - Water intake in 2022 was 1,082,165 cubic meters, an increase of 148,880 cubic meters from 2021, with 1,080,378 cubic meters sourced from natural water bodies[101] - The technical water consumption per ton of iron concentrate produced was 0.421 cubic meters in 2022, slightly increasing from 0.357 cubic meters in 2021[105] - The company’s actual wastewater discharge in 2022 was only 39.82% of the permitted discharge volume of 682,020 cubic meters, indicating a low risk of exceeding permitted levels[104] - The total recycled water provided to the processing plant from tailings storage facilities in 2022 was 8,577,800 cubic meters, an increase of 3.74% from 2021[108] - The company aims to prevent water pollution during production activities, with no significant changes detected in surface and groundwater quality in 2022[106] - The company’s water consumption for clean drinking water increased by 14,782 cubic meters in 2022 due to the return of personnel to workplaces post-COVID-19[101] Financial Performance - In the fiscal year 2022, the company reported revenues of $278.8 million and an EBITDA of $56.5 million, excluding non-recurring items and foreign exchange[157] - The total cash cost per ton, excluding transportation, was $53.2, representing a 24.9% increase compared to the previous year[157] - The company experienced a net loss of $87.9 million during the year, primarily due to a non-cash impairment provision of $103.2 million[157] - The company reported a basic profit of $25.0 million for the year 2022, demonstrating strong financial performance despite a challenging business environment[164] - EBITDA decreased by 66.9% to $56.5 million in 2022 due to reduced revenue and increased cash costs[188] - The company reported a net loss attributable to shareholders of $87,896, compared to a profit of $134,069 in the previous year, representing a 165.6% decline[195] Production and Operations - In 2022, the production volume reached 2,569,845 tons, slightly up from 2,557,794 tons in 2021[43] - The company sold 2,566,480 tons of iron ore, an increase of 0.5% compared to 2,553,804 tons in 2021[198] - The K&S mine is projected to achieve an annual capacity of 3.2 million tons of iron ore, producing high-grade iron concentrate with a 65% iron content[153] - The company plans to start mining at the Sutara mine in the second half of 2023, with expectations of higher production levels due to its high magnetic iron ore content[170] - The company faced operational challenges due to mining issues and railway congestion, which negatively impacted profit margins in Q4 2022[164] Employee and Social Responsibility - The total number of employees in 2022 was 1,804, a 2% increase from 1,767 in 2021[134] - The female employee ratio in 2022 was 29.7%, consistent with previous years[134] - The company released over 15,000 juvenile Amur sturgeon and salmon into the Amur River basin in 2022, with a total cost exceeding $29,280[120] - The health, safety, and environment committee consists of three independent non-executive directors, ensuring compliance with health and safety regulations[130] - The company implemented various biodiversity conservation measures, including forest fire prevention strategies in 2022[116] Market and Economic Outlook - The company anticipates that the macroeconomic environment will be influenced by slow growth, high inflation, and rising interest rates[164] - The ongoing geopolitical tensions and economic volatility are expected to impact iron ore demand and pricing[188] - The company is focused on diversifying risks and establishing new revenue sources to enhance growth opportunities[169] - The company believes that its business model and strategies will continue to enhance shareholder value despite external challenges[174] - The company is actively seeking to diversify its investment opportunities to expand its business portfolio, including the purchase and sale of vessels in Q1 2023[170]

Financial Performance - Basic profit reached $25 million for the year 2022, while the net loss after asset impairment was $88 million[2]. - The company reported a basic profit of $25.0 million for 2022, demonstrating strong financial performance despite a challenging business environment[58]. - EBITDA, excluding extraordinary items and foreign exchange, decreased by 66.9% to $56,514,000 in 2022[27]. - Basic earnings, excluding extraordinary items and foreign exchange, fell by 80.1% to $24,954,000 in 2022[28]. - The company reported a loss before tax of $88.540 million compared to a profit of $134.103 million in 2021[157]. - The group recorded a basic and diluted loss per share of $(87,896,000) for the year ended December 31, 2022, compared to a profit of $134,069,000 in 2021[180]. Production and Sales - Iron ore production was 2,569,845 tons in 2022, a slight increase of 0.5% compared to 2,557,794 tons in 2021; sales volume also increased by 0.5% to 2,566,480 tons[5]. - Iron ore production for 2022 was 2,569,845 tons, representing an 81% capacity utilization and a 0.5% increase from the previous year[29]. - In 2022, the company's sales and production volumes increased by 0.5% compared to the previous year, indicating a stable performance despite challenges[98]. Revenue and Pricing - The average price of iron ore with 65% iron content dropped by 25.3% to $139 per ton in 2022 from $186 per ton in 2021[5]. - The realized selling price for iron ore in 2022 was $118 per dry ton, a decrease of 25.8% compared to the previous year[7]. - The realized iron ore selling price dropped by 27.6% to $118 per dry ton in 2022 compared to $163 per dry ton in 2021[32]. - Total revenue for 2022 was $278.757 million, a decrease of 25% from $371.279 million in 2021[157]. - Revenue from iron concentrate sales was $274.598 million, down from $369.173 million in 2021, representing a decline of 25.5%[157]. - Revenue from external customers in China was $251.198 million, a decrease of 29.5% from $356.003 million in 2021[157]. Costs and Expenses - The cash cost per ton increased to $28.2 in 2022 from $21.5 in 2021, reflecting higher operational costs[17]. - The overall cash cost increased from $71.7 per ton in 2021 to $78.8 per ton in 2022, driven by higher shipping costs and mining expenses[22]. - Operating expenses for K&S in 2022 totaled USD 213.1 million, compared to USD 192.5 million in 2021[76]. - Operating expenses, excluding depreciation, increased to $227.700 million from $202.786 million, reflecting a rise of 12.3%[157]. Impairment and Asset Management - The company recorded an impairment loss of $103.2 million related to K&S mining assets due to weak iron ore prices and other economic factors[10]. - The company recognized an impairment loss of $103.169 million in 2022, with no impairment loss reported in 2021[157]. - The K&S project's recoverable amount was approximately $433.3 million as of December 31, 2022, leading to an impairment loss of $94,621,000 during the period[172]. Debt and Financial Position - The net debt to EBITDA ratio for the company was 0.36 in 2022, indicating a stable financial position[54]. - The company’s net debt decreased from $61.1 million at the end of 2021 to $41.6 million at the end of 2022, reflecting improved liquidity[102]. - As of December 31, 2022, total borrowings amounted to USD 78.5 million, a decrease from USD 113.2 million as of December 31, 2021[77]. - The company repaid $34.7 million in principal loans during the year, with $19.0 million coming from a debt-to-equity swap with its main lender[72]. - The company’s weighted average interest rate increased to 8.48% in 2022, up from 7.0% in 2021[53]. Market Conditions and Outlook - The outlook for 2023 remains uncertain, but the market is gradually recovering, with expectations of fruitful results from the Sutara mine and the Amur River Bridge operations[3]. - The company plans to continue monitoring market conditions and adjust its sales and marketing strategies accordingly[14]. - The demand for iron ore remains uncertain as China's economic recovery post-COVID-19 is still unclear, with the steel industry in China continuing to operate under low-profit margins[131]. - Geopolitical risks related to the Ukraine crisis continue to adversely affect the global economic situation, influencing the company's outlook[86]. Strategic Initiatives - The company plans to start mining at the Sutara site in the second half of 2023, as the Kimkan site is nearing depletion[87]. - The company plans to utilize the newly opened Amur River Bridge to transport more products to Chinese customers, reducing delivery time from 3-5 days to 1-3 days[124]. - The company is actively seeking diversification opportunities, including potential ship purchases in Q1 2023, to mitigate risks and establish new revenue sources[88]. - The company emphasizes the importance of completing the Sutara development to maintain continuous production despite external threats and challenges[132]. Employee and Operational Metrics - As of December 31, 2022, the company employed 1,804 staff, with total employee costs amounting to $35.7 million, an increase from $28.3 million in 2021[56]. - The company faced challenges in Q4 2022 due to a difficult operating environment, impacting profit margins and necessitating a temporary reduction in operational scale[85]. - The company has successfully resolved mining issues through constructive discussions with contractors, improving production efficiency[96].

Financial Performance - EBITDA for the first half of 2022 was approximately $52 million, with a basic profit of about $39 million[14]. - The total impairment loss for the group amounted to approximately $113 million, resulting in a net loss of about $78 million for the first half of 2022[10]. - Revenue decreased by 23.7% to $165,658 thousand from $217,170 thousand year-on-year[26]. - The company reported a loss attributable to owners of $77,885 thousand, a significant decline from a profit of $98,271 thousand in the previous year[26]. - The company reported a loss before tax of $(80,173) thousand, compared to a profit of $97,964 thousand in the same period last year[134]. - The net loss for the period was $(77,942) thousand, a significant decline from a profit of $98,230 thousand in the previous year[137]. - Basic and diluted loss per share was $(1.10), compared to earnings of $1.39 per share in the prior year[134]. - The total comprehensive loss for the period was $(71,452) thousand, compared to a comprehensive income of $91,878 thousand in the same period last year[137]. Production and Sales - In the first half of 2022, K&S operated at slightly above 80% capacity, producing approximately 1.3 million tons of high-grade iron concentrate[10]. - Iron ore production decreased by 4.0% to 1,258,847 tons compared to 1,310,718 tons in the same period last year[26]. - K&S shipped 1,277,048 tons of iron concentrate in the first half of 2022, maintaining sales levels similar to the previous year despite logistical challenges[80]. - Sales volume of iron ore fell by 1.8% to 1,277,048 tons from 1,300,045 tons year-on-year[26]. - The realized selling price based on wet metric tons dropped by 22.3% to $129.7 from $167.0 in the previous year[26]. Costs and Expenses - Cash costs per ton, including transport to customers, increased by 19.8% to $78.6 from $65.6[26]. - Operating expenses (excluding depreciation and amortization) increased to $(115,561) thousand, up 23% from $(93,925) thousand in the prior year[134]. - General and administrative expenses rose to $10.104 million from $5.501 million, marking an increase of approximately 83.5%[173]. - The company reported a significant increase in transportation and freight costs, which rose to $38.837 million from $29.823 million year-over-year[173]. Cash Flow and Debt Management - Cash and deposit balance increased to approximately $77 million, while net debt decreased sharply to about $26 million as of June 30, 2022[14]. - Financing costs decreased by 61.5% to $4.2 million in the first half of 2022, attributed to a reduction in loan balance after a voluntary early repayment of $70 million in 2021[55]. - The company’s cash and bank balances increased to $76.9 million as of June 30, 2022, compared to $52.1 million at the end of 2021, due to strict cash management measures[67]. - Total borrowings as of June 30, 2022, amounted to $102.9 million, down from $113.2 million as of December 31, 2021[71]. - Net debt significantly reduced to $26.0 million as of June 30, 2022, enhancing the company's ability to withstand interest rate fluctuations[71]. Market Conditions and Challenges - The average Platts 65% iron ore index for the first half of 2022 was $165 per ton, a 22% decrease from $211 per ton in the same period last year[13]. - The inflation rate in Russia reached 14.2% in the first half of 2022, significantly impacting operational costs for K&S[14]. - K&S faced operational challenges due to railway congestion and geopolitical tensions affecting transportation demand[10]. - The company is exploring alternative shipping routes and expanding local sales to mitigate the impact of external challenges[10]. Future Plans and Developments - The company plans to enhance production capacity by potentially adding processing equipment for the K&S project and developing other exploration projects[6]. - The company is preparing to commence operations at the Sutara mine, expected to improve production capacity in the second half of 2023[20]. - The estimated initial capital expenditure to bring the Sutara mine into operation is approximately $49.2 million, with $14.6 million already incurred as of June 30, 2022[63]. - K&S is evaluating options to upgrade its first-phase production facility to increase annual capacity to approximately 4.6 million tons[77]. Regulatory and Governance - The company adhered to the corporate governance code as per the listing rules during the reporting period[123]. - The board of directors confirmed compliance with the standard code of conduct regarding securities trading[123]. - The audit committee reviewed the unaudited interim results for the six months ending June 30, 2022, with discussions held with the management[124]. Employee and Operational Metrics - Employee costs totaled $19.5 million for the reporting period, compared to $13.7 million for the same period in 2021, with a workforce of 1,773 employees[73]. - K&S reported a lost time injury rate of 1.37 per million hours worked, compared to 0.7 in the same period of 2021, with one injury incident and no fatalities reported[88]. - K&S has established an emergency office to prevent the spread of COVID-19, implementing necessary measures without significant operational impact from the pandemic[88].