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Century Global cuts losses and updates on diversification progress

Wednesday, November 9, 2016 13:25
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Century Global Commodities Corp. (TSE:CNT) on Wednesday said it cut its losses by nearly 20% in the second quarter ended Sept 30 and updated on strides to diversify.

The total comprehensive loss was C$1.827mln versus C$2.238mln in the second quarter of 2015.

The company also said that its diversification is progressing, as it adds quality food services in China to its operating portfolio in addition to non-ferrous metals.

“Management believes that the Company is well positioned to take advantage of more positive iron ore market conditions, when those materialize. As the market recovers in the future, the Company plans to first develop the DSO projects that will generate positive operating cash flow, then leverage that cash flow and experience for the subsequent development of its high-volume and more capital-intensive taconite/magnetite projects. In the meantime, the Company has also optimized its capital allocation to avoid all unnecessary exploration activities and expenditures,” it said in a statement.

The company said of its food services division that as China’s economy transforms from a fixed asset investment development stage to a consumer oriented one, it is creating the world’s largest rapidly expanding middle-class population.

“Following on from what we have seen in the mining industry, the demand for high-quality and healthy food has been growing tremendously and is expected to do so for decades to come, well beyond mineral commodity sector,” it said of its outlook.

The company said it continues to believe market conditions for other metals may recover earlier than iron ore. In the quarter other base metals rebounded from what appears to be the bottom of the cycle with zinc and nickel topping the list (increased 12% and 14% respectively).

“Therefore, we believe that there will be more value creation opportunities in diversifying into certain precious and base metals opportunities. The global market will benefit hugely over the next market cycle – and very possibly beyond – from China’s transition to a massive consumption-driven economy,” it said.

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