YEREVAN, September 23. /ARKA/. Moody’s Investors Service (“Moody’s”) has assigned a corporate family rating (CFR) of B2, probability of default rating (PDR) of B2-PD to Zangezur Copper Molybdenum Combine CJSC (ZCMC), one of the largest exploration and mining companies in Armenia. The outlook is stable.
ZCMC has a concentrated ownership structure with Cronimet Group holding 75% in the company, while its board of directors lacks independent members. ZCMC has substantial related party transactions, which include molybdenum processing under tolling scheme and molybdenum sales, which are conducted with the companies under common control on an arm’s length basis. The risk of concentrated ownership is somewhat mitigated by the track record of conservative financial policy and operational improvements since 2015-17.
The stable outlook reflects Moody’s expectation that the company will be able to maintain its solid credit metrics notwithstanding copper price volatility, improve its liquidity in the short-term and demonstrate an adequate liquidity on a sustainable basis.
Moody’s could downgrade the ratings if the company’s leverage, as measured by Moody’s adjusted debt/EBITDA, deteriorates to above 3.5x on a sustained basis; weak liquidity is not timely addressed; or operating metrics (production, metal content, recovery) materially weaken.
Zangezur Copper Molybdenum Combine CJSC (ZCMC) is one of the largest exploration and mining companies in Armenia. The company principally produces copper concentrate and molybdenum from its single open-pit mine. In 2018, the company generated revenue of $414 million and Moody’s-adjusted EBITDA of $96 million. ZCMC is privately owned by Cronimet Group (75%), the company’s management (12.5%) and a private investor Jean Buffet (12.5%). -0-
