By: AGBI

Saudi state mining company Maaden will continue its ambitious investment programme despite wartime disruptions, its CEO Bob Wilt said.

Maaden released better-than-expected earnings results on Monday, which included a 13 percent annual increase in net profit. Shares in the company, which is listed on the Saudi Exchange, rose more than 5 percent on the news.

A 16 percent increase in revenue was due to higher commodities prices and a re-routing of sales, Wilt said on an earnings call.

“Obviously our major supply route was based on the Arabian Gulf and the Strait of Hormuz which remains chequered at best,” said Wilt. Declining to give details about the alternative export routes, he said the company was adapting to “the new normal”.

The company said it would look to maintain its capital expenditure plans, which Wilt has previously described as “the largest capital programme in the history of mining”. Maaden plans to deploy $110 billion over the next decade, a sum analysts have described as “staggering”.

While production of ammonia and phosphate dropped due to supply chain constraints and a shortage of sulfur, a vital input for phosphate, Maaden maintained its previous guidance on its other main products, including gold and bauxite.

“The market was waiting for Maaden’s numbers,” said Yousef Husseini, managing director at EFG-Hermes Securities Brokerage in Cairo, mentioning the company’s previous predictions that it could maintain most of its sales output despite disruptions in the Gulf.

“A lot of people took that with a grain of salt, including me,” said Husseini. “And they’ve proven us wrong.”

On Monday’s call, the company said that phase one of its Phosphate 3 project is on track to open before the end of the year and first gold from its Ar Rjum mine will come in 2028.

“You will see some ramp up of spending for the second half of the year,” said chief financial officer Gilberto Antoniazzi. “As expected.”

Maaden has previously said it wants to triple exploration efforts.

“It doesn’t seem like they’re scaling anything back at this stage,” said Husseini. “They’re very long term in the way they think. That’s why I think they haven’t slowed down. What’s happening now, even if it spills into next year, for them it’s still temporary.”

Maaden is majority owned by the Public Investment Fund, the kingdom’s $1 trillion sovereign wealth fund.

Developing a valuable mining industry is the “Third Pillar” of the Vision 2030 programme and Wilt has previously said that Maaden’s stated ambition is to become the world’s most valuable mining company by market capitalisation.

The company also reported a 10 percent increase in debt to $5.7 billion. Its net debt-to-Ebitda – earnings before interest, taxes, depreciation and amortisation, used as a measure of profitability – is now 1.3×.

“They have a lot of debt, but they obviously generate a lot of cash,” said Husseini. “And they have the support of the Saudi government and the PIF at the end of the day.”

Maaden’s shares rose 5.4 percent on Monday to SAR64.90, up 6.5 percent year to date.