Disruptions at the Mongolia-China border amid a surge of new Covid-19 cases in Mongolia could lead to short-term pressure on Mongolian Mining Corporation’s cash flow, but are unlikely to lead to a lasting deterioration of its liquidity and credit profile, Fitch Ratings says.
The Fitch previously expected a further improvement in traffic into China towards levels achieved in 2019 with about 700 trucks per day. According to the company, the daily throughput has fallen to only about 50 trucks.
There were no closures at the Gashuun Sukhait/Ganqimaodu border crossing where MMC exports, but we believe the recovery of throughput towards 2019 levels could be delayed due to the tighter restrictions on the border by China.
According to MMC, its truck drivers and mining personnel as well as staff at surrounding mining companies have been vaccinated and Mongolia has also begun its vaccination programme.
Fitch also does not expect any negative impact on MMC’s interest payment of USD20.4 million due on April 15 on its US dollar notes. According to MMC, its cash balance at end of first quarter of 2021 was about USD30 million and free cash flow remains positive, providing sufficient funds for the interest payment. The company also says it has access to funding via local banks, although Fitch does not consider uncommitted lines in its liquidity assessment.