Openpit mining company Afrimat released its interim results for the six months ending on August 31, in October. The group, which has built up a track record of “excellence in small-scale mining and materials supply”, delivered solid results despite the effects of the global Covid-19 pandemic.

As reported by Mining Weekly, CEO Andries van Heerden explained that the disruption was countered by Afrimat’s diversification strategy, the implementation of proactive measures to minimise the impact of the pandemic, as well as cost reduction and efficiency improvement initiatives.

Operating profit increased by 11.0% to R353.1-million, despite a decrease of 9.4% in revenue. The Group ended the period with cash equivalents of R330.6-million, an increase of 170% from the comparative 2019 period.

The effective tax rate increased from 16.5% to 28.4% during the period, as a result of the use of previously unrecognised assessed losses at Afrimat’s Demaneng mine for the prior year. An interim gross dividend of 36c a share was declared.

Van Heerden pointed out that the business had gradually become more sophisticated with the addition of industrial minerals, and iron-ore.

“The potential acquisition of the nickel mine, Nkomati mine will add anthracite to our portfolio, thereby enhancing our skills and our commodity diversity, while the [junior mining company] Coza Mining acquisition will further strengthen our iron-ore capacity,” he said.

Van Heerden explained that Coza Mining was a high-quality ore resource which consisted of the Jenkins, Driehoekspan and Doornpan mines located close to Afrimat’s Demaneng iron-ore mine in the Northern Cape.

“This acquisition will potentially allow for a local product supply agreement to steel and iron-ore major ArcelorMittal, whereas the Demaneng iron-ore mine is solely focused on the export market.”

Operational Review
Van Heerden stressed that Afrimat entered the national lockdown with a robust balance sheet, which ensured that it was well positioned for the uncertainty that lay ahead.

“The impact of the lockdown was dampened by the partial reopening of the Demaneng iron-ore mine and certain industrial minerals operations early during the lockdown period,” he commented.

Further, from April 20, Afrimat ramped up operations, in line with market demand and government regulations. All operations recovered from the Covid-19 impact and returned to profitability before August 2020.

“Our product range is now well diversified and consists of construction materials including aggregates and concrete-based products, industrial minerals including limestone, dolomite and silica, and bulk commodities, which is currently made up of iron-ore,” said Van Heerden.

The bulk commodities segment delivered growth of 135.8% in terms of operating profit to R325.8-million. This was primarily owed to the favourable iron-ore price during the reporting period.

“We are well positioned to capitalise on our strategic initiatives and future opportunities, with prospective growth continuing to be driven by the successful execution of our strategy. “Recent and current acquisitions are bringing a wider product offering to the market,” Van Heerden stated.

Operational efficiency initiatives aimed at expanding volumes, reducing costs and developing the required skill levels across all employees, remain a key focus for all Afrimat operations, he concluded.