Palabora pays dividend despite fall in HEPS

I-Net Bridge | Mon, 08 Feb 2010 17:10
[miningmx.com] -- Copper mining company Palabora Mining, which operates South Africa's largest copper mine, on Monday declared a R6.20 dividend despite a 60% fall in its full year headline earnings.

The company declared a dividend of 0.82c in 2008.

Headline earnings per share of 598c were reported for the 12 months to end December 2009, compared to 1,493c a share for the year to end December 2008, as production dipped and copper prices fell.

Net profit for the year decreased to R284m, or 597c a share, in 2009 from R720m, or 1,489c per share, in 2008.

Sales of products decreased by R352m or 6% to R5.83bn in 2009, mainly as a result of lower average copper prices realized and a 26% decrease in other by-products sales.

Lower average copper prices resulted in a decrease of R1.32bn in sales with the realised average copper price at 231c a pound in 2009 compared with 317c a pound in 2008.

The group achieved an average realised selling price (post hedge) for copper rod and cathode of R36 307 per tonne (2008: R40 426) and R44 249 per tonne (2008: R40 433) respectively.

But sales were positively impacted by lower realised hedging losses resulting from the contractual reduction in the swap settlement terms from 42,000 tonnes of copper in 2008 to 22,000 tonnes in 2009.

This resulted in a R1.03bn reduction in swap settlement costs in 2009.

Copper cathode produced for sale decreased 9% from 75.9 thousand tonnes in 2008 to 69.4 thousand tonnes in 2009.

Copper sales volumes increased 2.3% from 85 thousand tonnes in 2008 to 87,000 tonnes in 2009 while magnetite sales volumes increased 35% from 1.9 million tonnes in 2008 to 2.8 million tonnes in 2009.

Acid sales volumes decreased 22% from 109 thousand tonnes in 2008 to 85 thousand tonnes in 2009.

"Palabora's profit in 2009 is pleasing in light of the global financial crisis," said Palabora managing director Matthew Gili.

He said gross revenue was lower in 2009 compared with 2008 because of a 37% decrease in copper prices, which was partially offset by a 35% increase in magnetite sales over 2008 and a 42% increase in magnetite pricing.

In addition, net revenue was positively impacted by the reduction in hedge related costs.

Gili said repairs and maintenance in several mine production centers along with an increase in purchased cathode lead to higher cost of sales and increased production and sales of magnetite lead to an increase in selling and distribution costs.

"We remain cautiously optimistic markets will continue to strengthen in 2010, with demand for copper and magnetite remaining buoyant," Gili said.

The senior term facility was settled in 2009 with the final repayment of R80m, leaving the company with outstanding debt totalling R102m on its revolving credit facility.

At 16:32 shares in Palabora were unchanged at R105 on the JSE.