African Rainbow Minerals posts 8% earnings rise, ups dividend

2nd September 2013

By: Martin Creamer

Creamer Media Editor

  

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JOHANNESBURG (miningweekly.com) – South Africa’s black-led diversified mining company, African Rainbow Minerals (ARM), has defied the tough times by posting 8% higher headline earnings thanks mainly to better performances from the Nkomati Nickel mine, the platinum mines and the Goedgevonden coal mine.

The JSE-listed company, headed by executive chairperson Patrice Motsepe, increased its dividend from R4.75 a share to R5.10 a share, and remains financially robust with net cash of R2.7-billion – up on the R2.3-billion of the 2012 financial year.

The 8% earnings rise in the 12 months to June 30 took headline earnings to R3.74-billion, compared with R3.45-billion in the previous financial year, and headline earnings a share rose 1 735 cents compared to 1 615 cents in F2012.

ARM's earnings before interest, tax, depreciation and amortisation, and income from associates, were 11% higher at R7.23-billion.

The average gross profit margin of 34% is marginally down on the 35% of last year.

ARM Platinum’s contribution to headline earnings rocketed in the period from R60-million to R572-million and ARM Coal lifted its contribution from R52-million to R148-million.

The usual hefty contribution from ARM Ferrous slipped marginally to R3.2-billion from R3.5-billion last year.

Accounting policy resulted in basic earnings of R1.6-billion being knocked back by an exceptional net R2-billion after-tax unrealised mark-to-market impairment of ARM’s investment in South African gold major Harmony Gold.

Increased sales volumes were achieved in nickel, platinum-group metals, iron-ore, chrome ore, export coal and Eskom coal, from Goedgevonden.

Costs were kept in check, helped by Dwarsrivier chrome mine and Nkomati and Goedgevonden managing to lower their unit costs.

The iron-ore growth mines in the Northern Cape have ramped up to steady-state production and the turnedaround Nkomati increased production by 66% to 23 220 t of nickel and reduced costs by 42% to $4.98/lb.

The Lubambe copper mine commissioned its concentrator plant two months ahead of schedule, produced 14 871 t of copper and is seeing to improving the quality of concentrate delivered to the smelter.

ARM has approved the establishment of a joint venture manganese alloy smelting facility in the Sarawak State of Malaysia with Sumitomo Corporation and China Steel Corporation, a project that is expected to cost $328-million at full capacity of 169 000 t/y.

Construction of the two 81 MVA furnaces and all related infrastructure, due to start in 2014, will be commissioned in 2016.

ARM has a number of other potential projects, including further expansion of its iron-ore operations, increasing manganese ore production and the expansion of Modikwa platinum mine.

ARM is a black-economic-empowerment portfolio investor in a variety of South African and African operations of the JSE-listed Anglo American Platinum, Assore, Impala Platinum, Norilsk Nickel, Glencore Xstrata, Vale and Zambian Consolidated Copper Mines Investment Holdings, and is the largest single shareholder in Harmony Gold.

ARM’s issued share capital as at end June, of 215 624 972 shares, put its market capitalisation at R32.3-billion (R$3.3-billion).

The company’s closing share price at end June was R149 a share, down from a 12-month high of R208 and up on the 12-month low of R139 a share.

Edited by Creamer Media Reporter

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