ANNUAL%20REPORT%202015%20eng

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Management Discussion and Analysis The mining cost during mine operations consists of costs associated with overburden and topsoil removal and ROM coal extraction, including the costs related to mining staff and equipment, together with base and performance fees paid to the mining contractor, blasting contractor fees, and costs paid to fuel suppliers. For the year ended 31 December 2015, the Group’s total mining costs were approximately USD34.8 million (2014: USD126.8 million). Mining unit cost was USD15.5 per ROM tonne for 2015, compared to USD19.7 per ROM tonne in 2014. Table 9. Total unit mining cost per ROM tonne: Year ended 31 December 2015 2014 (USD/ (USD/ ROM tonne) ROM tonne) Mining cost 15.5 19.7 Blasting 1.3 1.4 Plant cost 3.5 5.5 Fuel 2.3 3.4 National staff cost 1.4 1.2 Expatriate staff cost 0.6 0.5 Contractor fee 5.2 5.1 Ancillary and support cost 0.2 0.4 Depreciation and amortisation 1.0 2.2 Note: The above mining cost table does not include idling cost The Group identified components of the mine in accordance with the mine plan, and accounting of mining unit costs is based on the stripping ratio applicable to each component of the mine. Average accounting stripping ratio for components mined during the year ended 31 December 2015 was 2.5 bcm per tonne, compared to 2.7 bcm per tonne for the year ended 31 December 2014. The mining cost is not only recorded in the income statement, but also the costs of pre-stripped overburden, which is associated with the coal to be mined, processed, transported and sold in the future, in excess of the average stripping ratio, which is capitalised in the balance sheet as mining structure. The processing cost during mine operations primarily includes the costs associated with the operations of CHPP including power and water costs. During the year ended 31 December 2015, the Group’s processing cost was approximately USD13.1 million (2014: USD31.6 million), of which approximately USD5.2 million is related to the depreciation and amortisation of the CHPP, USD3.0 million incurred in the UHG Power Plant for the power generation and distribution, and USD0.8 million incurred in the UHG Water Supply Facility for the water extraction and distribution related to the washed coal sold during the period. Annual Report 2015 37
Management Discussion and Analysis Unit processing cost calculated per ROM coal in-feed tonne increased by USD0.9 or 18.4% from USD4.9 per ROM tonne for the year ended 31 December 2014 to USD5.8 per ROM tonne for 2015. The increase was mainly attributable to the lower utilisation of CHPP module capacity. Table 10. Total processing cost and unit processing cost per ROM tonne: Year ended 31 December 2015 2014 2015 2014 (USD/ROM (USD/ROM (USD’000) (USD’000) tonne) tonne) Total processing costs 13,084 31,596 5.8 4.9 Consumables 671 1,652 0.3 0.3 Maintenance and spares 812 3,293 0.4 0.5 Power 2,956 5,640 1.3 0.9 Water 777 1,863 0.3 0.3 Staff 1,767 2,636 0.8 0.4 Ancillary and support 897 1,080 0.4 0.1 Depreciation and amortisation 5,204 15,432 2.3 2.4 Note: The above total processing cost table does not include idling cost The handling cost is related to feeding ROM coal from ROM coal stockpiles to the CHPP, and also the removal of reject (primarily rock and sediment separated from coal) after coal processing. During the year ended 31 December 2015, the Group’s handling cost was approximately USD1.2 million (2014: USD6.0 million). Unit handling cost decreased by USD0.1 or 9.1% from USD1.1 per tonne in 2014 to USD1.0 per tonne for the year ended 31 December 2015. The decrease was mainly attributable to cost savings arising from lower fuel prices. Transportation costs include costs related to the transportation of coal products from UHG to TKH, and the transportation of coal products from TKH to GM, including fees paid to third party transportation contractors. During the year ended 31 December 2015, the Group’s transportation costs, excluding idling cost, were USD15.4 million (2014: USD74.4 million), of which USD8.4 million was related to long-haul (UHG-TKH) transportation, and USD6.9 million was related to short-haul (TKH-GM) cross-border transportation. On a unit cost basis, the Group’s overall transportation cost decreased in the UHG-GM section by USD0.6 per tonne or 4.3% from USD14.1 per tonne in 2014 to USD13.5 per tonne in 2015. The transportation cost in the long haul section (UHG-TKH) was increased from USD6.5 per tonne in 2014 to USD7.4 per tonne in 2015. Long-haul transportation costs increased due to lower transportation volume. For the short-haul (TKH- GM) section, where the Group utilised third-party contractors, the Group’s transportation costs were reduced by 19.7% from USD7.6 per tonne in 2014 to USD6.1 per tonne in 2015 as a result of effective negotiations on haulage fees with the contractors. The logistics costs are mainly related to costs associated with operating product stockpiles at UHG and TKH. For the year ended 31 December 2015, the Group’s logistics cost was approximately USD2.7 million (2014: USD9.8 million). The reduction in logistics costs is attributable to lower sales volume of coal products. The site administration cost during mine operations is primarily related to the site support facilities and consolidated management of the Group’s mining, processing, transportation and logistics operations. For the year ended 31 December 2015, the Group’s site administration cost was approximately USD6.3 million (2014: USD13.0 million). 38 Annual Report 2015
Page 1 and 2: (Incorporated in the Cayman Islands
Page 3 and 4: Company Profile Mongolian Mining Co
Page 5 and 6: Corporate Information BOARD OF DIRE
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Financial Summary SUMMARY DATA OF C
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Appendix I Technical details of the
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Appendix I Criteria Commentary •
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