JOHANNESBURG (miningweekly.com) – The headline earnings of diversified mining company African Rainbow Minerals (ARM) rose sharply in the 12 months to June 30, when the company generated strong cash flow that has underpinned a boosted cumulative dividend payout of R1.7-billion.

Headline earnings increased by 51% to R4 814-million, cash from continuing operations amounted to R3 291-million, excluding the attributable cash of R2 507-million held at ARM Ferrous, and the final dividend of 750c a share took the cumulative dividend to 1 000c a share, well up on last year’s 650c a share.

The basic earnings of the Johannesburg Stock Exchange-listed company, headed by executive chairperson Patrice Motsepe, were R4 562-million on higher dollar prices realised for most commodities except iron-ore, platinum and chrome concentrate.

Cash generated from operations increased by R323-million to R1 934-million and cash dividends received from the Assmang joint venture totalled R3 000-million.

Capital expenditure increased by R201-million to R1 150-million, compared with R949-million for the corresponding period last year.

ARM’s total consolidated assets of R34-billion include the company’s R1 351-million investment in Harmony Gold. Market capitalisation at June 30 was R23.97-billion.

ARM's partners at the various operations are Anglo American Platinum Limited, Assore, Impala Platinum, Norilsk Africa, Glencore, Vale and Zambian Consolidated Copper Mines.

Headline earnings from the manganese division were 64% higher as manganese ore sales volumes increased by 7% and average rand realised export manganese ore prices increased by 18% and alloy prices by 20%.

Despite achieving record iron-ore sales volumes, the iron-ore division's headline earnings were 24% lower, at R1 672-million, on lower realised export iron-ore prices.

ARM Platinum headline earnings increased by 20% to R420-million, as Modikwa Mine went from a headline loss of R66-million to headline earnings of R105-million on an improved three-year concentrate agreement with Anglo American Platinum.

Two Rivers platinum mine’s lower headline earnings of R306-million were negatively affected by a decrease in the mine's head grade. Nkomati nickel mine reported an R82-million headline earnings drop to R9-million on grade issues. An amendment to the mine's concentrate offtake agreement, concluded with Metals Trade Overseas AG, improves offtake for the mine. Nkomati was also impacted by a lower chrome contribution as the mine's average dollar price for chrome fell by 50%.

All three ARM platinum operations faced grade decline in the financial year under review. A number of interventions are being implemented to address this. Modikwa is introducing stope width control measures, particularly in the South 1 and South 2 shafts, to reduce dilution and improve the grade. The mine head grade is expected to return to normalised levels in the next financial year. At Two Rivers mine, the level of split reef being mined is expected to reduce in 2020 when mining in the Tamboti area begins. Nkomati’s grade is expected to improve from 2021 as more ore on the Western section of the opencast mine is mined.

ARM Coal headline earnings were R1 485-million, taking in the impact of R1 210-million as a result of debt restructuring with Glencore.

The headline loss from Goedgevonden coal mine was R30-million, while PCB operations contributed higher headline earnings of R256-million, both excluding the impact of the debt restructuring.

ARM reported that an accident occurred at Modikwa, when two employees were exposed to irrespirable atmosphere underground last October, with Fabian Majoro succumbing to his injuries at the scene and Daniel Ntlangoe recovering in hospital.

Earlier this year, a bus carrying Modikwa employees was attacked and set alight, with six people fatally injured in the incident.

In March, Raymond Anak Edmund Samaie, a production shift manager, suffered a fatal injury while he was assisting to unblock a section of a gas cleaning plant at Sakura Ferroalloys in Malaysia, and Bonga Lingeni, a grader operator, was fatally injured in January at the Tweefontein coal mine, which forms part of PCB operations.