Good morning, and welcome to this webcast presentation of Rana Gruber's second quarter results. My name is Gunnar Moe, and I am the CEO of Rana Gruber. With me today is our CFO, Erlend Høyen, who will give you additional insight into the financial results for the quarter. I will start today's presentation by giving you a quick introduction to Rana Gruber. I will go through the highlights for the quarter before Erlend takes you through the financials. I will come back to sum up and share a few comments on our outlook before we move on to Q&A. You may ask your questions at any time during the presentation by using the Q&A function embedded in the webcast solution, and we will answer them at the end of the session. Let's jump to this.
Rana Gruber is the only iron ore producer in Norway, located in the heart of Norway, Mo i Rana, with more than 200 years of history. Our products of iron ore concentrates and our specialized product, Colorana, are sold in the international market, mainly to customers in Europe. We extract iron ore from underground mines and open-pit mines in the mountains surrounding Mo i Rana. Our annual production capacity is 1.8 million metric tons of iron ore concentrate. We have a fully invested infrastructure and operations, enabling us to run operations with less operational and financial risk. Our products are all natural, and we do not add chemicals in the production. We are the producer with lowest CO2 emissions globally, and we have decided to reduce all CO2 emissions to zero by 2025. Let's have a quick look at the overall market fundamentals our industry is exposed to.
Increased environmental concern has led to a shift in demand in our end markets towards more high-quality products and boosted the transition to electrical cars. On top of this, economic stimulus packages post-COVID-19 have been implemented globally to support infrastructure projects. After the summer, the market for iron ore has been impacted by stricter steel production regulations in China. However, the market fundamentals remain strong. Let's have a look at the highlights for the second quarter. Our progress in the second quarter was a result of good production planning and execution and a continued strong market for iron ore. We increased concentrate production by 7% from Q2 2020, and the strong price momentum for iron ore continued. Average hematite prices increased by 20% from the previous quarter and showed more than a doubling from the same period last year.
This translated into a doubling of revenues and an EBITDA margin of 72%. For Q2 2021, the board has resolved to pay out NOK 3.86 per share, corresponding to 70% of EPS. This makes Q2 2021 the second quarter in a row with dividend distribution in the top end of the targeted range of 50%-70%. During Q2 2021, Rana Gruber extended its offtake agreement with Cargill until 2030. Let me share a few more details about this partnership on the next slide. During Q2, we announced that we have extended our offtake agreement with Cargill, one of the world's largest commodity traders for our entire hematite production. Cargill has committed to buy and market all our annual production of approximately 1.7 million metric tons of hematite concentrate. The agreement now lasts for nine years until 2030.
This gives us a long-term visibility and proves our commitment to a long-term approach to iron ore production. Cargill is a solid partner with a leading market position, able to identify the right buyers and the best prices. Contracts are settled based on market prices and customer negotiations, and we have now reduced our financial risk significantly. The financial effect from this agreement is always a result of the market, but based on our existing cooperation with Cargill, we experience that they as a substantial market player, are able to negotiate market-leading terms. Our partnership with Cargill is a great validation of the quality of our iron ore products and is also a key enabler for us to meet our decarbonization targets with high-quality products. Now I will leave the word to CFO Erlend Høyen for the financial review.
Thank you, Gunnar, and good morning, everybody. We will now dive into the financial performance for the quarter. The financial figures will be nominated in Norwegian kroner, if not otherwise mentioned. Revenues doubled from Q2 2020 to Q2 2021, driven mostly by the price increase for iron ore and supported by solid production. Average market price for our main product, hematite, more than doubled compared to Q2 2020 figures. Concentrate production increased by 7% from the comparable period last year. EBITDA almost tripled since Q2 2020 and came in at NOK 411 million for the quarter, giving an EBITDA margin of 72%. Next, let's have a closer look at the production for the quarter. Most importantly, we had no injuries related to our production, and sick leaves has continued to fall during the first half of 2021. The increase in production was in line with the mine plan.
The positive production trend is the result of continuous operational planning, high utilization at the processing plant, and high iron ore quality in the quarter. As you can see from the slide, our main product, hematite, represents more than 90% of the total production. Production of raw iron ore was 13% lower in the second quarter of 2021 compared with the same period last year. Lower production volumes in both the underground mine and the open pit were related to higher raw material stocks entering the quarter, as well as higher iron ore quality, which reduces the amount of iron ore needed in the processing plant. Next, let's have a look at the cash cost and margin for the two largest products, hematite and magnetite.
Cash cost per metric ton for the quarter for our two main products showed an increase of 8.6% from Q2 last year, but declined compared to the previous quarter. Cash cost was mainly driven by higher activity in the mine related to preparation of the new mining level 1, 2, 3. Also please note that the cash cost is equal for our two main products. Long-term cost discipline and efficiency initiatives, reducing the cash cost per metric ton is a key part of the company's strategic priorities also going forward. The EBITDA margin for hematite came in at 73%, which is an increase both from the previous quarter and from the same quarter one year ago. The EBITDA margin for magnetite was 63%, which corresponds to an increase from Q1, but a decline from last year due to cash cost. Now, let's have a look at some other key figures.
We have gone through the revenue and operating part of the P&L. I will comment briefly on some of the elements that are displayed here. Net financial expenses of NOK 107 million in the period mainly consists of losses related to hedging of iron ore, gains on currency hedges, as well as interest rate costs. The current hedging portfolio consists of hedges entered into in 2020, in addition to new hedges made in 2021. I will come back to our hedging policy a bit more on the next slide. In sum, this gave a net profit for the quarter of NOK 206 million, compared with NOK 53 million in Q2 last year. This corresponds to an earnings per share of 5.51, up from 1.41 in the same period last year. Let's have a look at our hedging.
Our financial performance is exposed to fluctuations in the sales price of iron ore concentrate, as well as fluctuations in the currency level, mainly the US dollar and euros. Risk related to the sales price of iron ore is managed by combining physical delivery agreements towards customers and financial swap agreements. Our hedging positions shall contribute to a stable and solid cash flow, enabling both future investments and a predictable and attractive dividend strategy. Our hedging positions can comprise a maximum of 50% of annual production volumes and can be divided into positions for a duration of up to two years. It is always challenging to find the right timing to secure hedging positions, especially when a market is hit by sudden and high volatility. Recently, Chinese regulations on the country's steel productions led to a sudden shift in demand, resulting in high short-term volatility in the iron ore market.
On that background, we chose to secure volumes for the upcoming 12 months in the beginning of August, and now the current hedging portfolio secures operational cash flow for the company until the end of 2022. As illustrated in the graph on the right-hand side, our hedging portfolio is now on average at a level well above market prices that we saw in 2020. Let's have a look at the cash flow for the period. Total cash flow for the second quarter was NOK 211 million, compared with NOK 7 million in Q2 last year. This increase was mainly driven by increased sales volume and higher prices for hematite compared to last year. Strong operational performance also led to an increase in cash holdings, which by the end of June increased to NOK 425 million.
Total CapEx for the second quarter was NOK 33 million, of which NOK 16 million were related to development projects and NOK 18 million were related to maintenance CapEx. The development CapEx for the quarter mainly relates to new mining areas, exploration drilling, and to our strategic projects. The new mine in the underground mine is expected to boost iron ore for the next five years. Finally, let's have a look at our financial position at the end of June. We finished also the second quarter with a solid financial platform, enabling us to deliver on our dividend policy as well as keeping momentum on our strategic projects and important investments. The company's debt was restructured in connection with the IPO process, and we have a sound capital structure with an equity ratio of above 50%.
The company's debt, excluding leasing obligations by the end of the second quarter, consists of a single loan of $6.5 million, as well as an unused credit facility of NOK 100 million. This concludes the review of the financial performance. I would now like to leave the word back to Gunnar for his final remarks.
Thank you, Erlend. To sum up the positive momentum from Q1 continued into the second quarter, supported by good production planning and execution and a continued strong market for iron ore. This translated into a doubling of revenues and an EBITDA margin of 72%. For Q2 2021, we will distribute NOK 3.86 per share as dividend. This corresponds to 70% of EPS. During Q2 2021, we were glad to announce the extension of the offtake agreement with Cargill until 2030. This milestone agreement supports long-term stability and predictability, reduces the company's financial risk, in addition to providing a continuation of the partnership with Cargill on strategic projects. Rana Gruber and Cargill have a joint strategy of reducing carbon emission throughout the global value chains for steel production. Looking ahead, governmental spending on infrastructure projects continues to be a positive demand driver for our products.
Market fundamentals are strong, although short-term outlook and prices has been impacted by stricter regulations on steel producers in China. On the production side, the positive trend continued going into the third quarter. All production volumes for a full year of 2021 are already sold, and today's hedging portfolio secures operational cash flow for the company until end of 2022. Long-term strategic projects have been initiated which will enable higher product margins in addition to a production with less emissions leading the way for our industry. This concludes today's presentation, and please note that we will revert in November for our Q3 report. I would now like to open for questions. Do we have any questions from the audience?
Yes, we have. One question first for you, Gunnar. Will you reach your annual production capacity of 1.8 million tons per year?
Well, we are always aiming to reach the production capacity of 1.8 million metric tons. If you follow the iron ore from the mine to processed concentrate, there are several processes and factors which will affect production volumes. In sum, this will often lead to some deviation between capacity and production volumes.
Yes. Another question for you, Gunnar. When are your plan to list on the main list at Oslo Børs?
As stated in the process of going to Euronext Growth, our plan is to list the company at Oslo Børs 12 month after our listing at Euronext Growth. This implies around the first quarter of 2022.
Thank you. Erlend, what are your plans for cost reduction to meet the impact of the lower prices?
Our company has a long-term focus on reducing our cost base, and we have always had. This will be implemented through internal improvements such as production planning, internal efficiency programs, efficiency through the use of new technology, amongst other. Our focus on our own cost base is not affected by the day-to-day base volatility in the market.
Thank you. Can you also say something about your EBITDA sensitivity from iron ore and currency change?
Yeah. In our listing materials, we show some sensitivities both towards the iron ore market and the foreign exchange rate. The iron ore market obviously being the most sensitive. If you go to our webpage, you can find some materials there amongst the company presentation amongst other.
Thank you. Another question for you, Gunnar. How are you progressing on your projects lifting the iron ore content?
Increasing the iron ore content from 62% to 65% implies higher prices in the market for our products. We are progressing according to plan, and we will revert after this first quarter of 2022 with an update on this project. It's also important to notice that there are both operational and marketing efforts needed to get in place to realize the project. For the latter, our partnership with Cargill will be extremely important.
Yes. I have a last question. I think this will go to you, Erlend. What will you do with your cash holdings by the end of the year?
Cash holdings by the end of the year will be a question for the board of directors. Finally, our general meeting will decide if there should be any potential extraordinary dividends or if we should start a buyback program for our own shares, for instance. We haven't decided this yet. We'll have to get back to that question at a later date, I think.
Thank you. That's all.
Good. Thank you everyone for listening in to this webcast from Rana Gruber.
Have a nice day.