Moody’s could cut Consolidated Minerals

Moody's Investors Service said it placed all the ratings of Consolidated Minerals Ltd. (Consmin) on review for downgrade.

The review follows the company's announcement of quarterly results well below the rating agency expectations, as well as cautionary guidance provided by management regarding possible lengthy times to (a) complete new offtake agreements replacing the one terminated last August with its largest customer for Ghana ore, Tianyuan Manganese Industry Ltd. (TMI, unrated); and (b) recover $50 million under an existing standby letter of credit upon the occurrence of a non performance event by Tianyuan.

"The review for downgrade reflects our concerns regarding the potentially higher than initially anticipated negative consequences for Consmin of the abrupt termination of the offtake agreement with TMI in August 2014," Gianmarco Migliavacca, Moody's vice president, senior credit officer and lead analyst for Consolidated Minerals, said in a news release.

"Difficulties the company may face for a prompt reallocation of sales from TMI to existing and new customers create uncertainty and could materially affect Consmin's financial profile and liquidity over the next several quarters, if not addressed by management in a timely and efficient manner."

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