[miningmx.com] — ACQUISITION targets may come aplenty as some commodity markets are taking strain, according to diversified miner African Rainbow Minerals, saying value has once again returned to the market.
The company reported annual figures to end-June on Monday. Presenting the group’s financials to journalists and analysts in Sandton, chairman Patrice Motsepe said the company was looking with new vigour at especially platinum targets to add new ounces to its portfolio.
His remarks came depite the fact that ARM was not spared the current turmoil of the platinum industry, with the cyclical downturn, coupled with significantly higher costs and a five-week strike at the Modikwa joint venture, hitting margins. The segment’s attributable earnings were down R455m to R60m.
“There’s blood on the floor in platinum,’ Motsepe said. “When there’s pain, our focus on acquisitions enhances. We wouldn’t have been where we were today if it wasn’t for pain.’
Although the diversified miner’s asset portfolio has largely been built on Motsepe’s deal-making ability, the number of acquisition transactions has to some extent fizzled out over the last two to three years during a period of strong growth in commodity prices. Motsepe, however, said the company needed to start to think about its future beyond 2020.
“Acquisitions will always be important to ARM’s strategy,’ Motsepe said.
Financial Director Mike Arnold said the company had to focus on both building its existing assets as well as acquisitions. “We look at both all the time,’ Arnold said. Motsepe added the company was looking to make mint of state-owned logistic utility Transnet’s R300bn market demand strategy – of which the upgrade of South Africa’s ports as well as manganese and iron ore lines were a key component – having feasibility studies underway at its iron ore and manganese assets in the Northern Cape.
Asked about the state of the South African mining industry given various incidences of labour unrest which came to a head with the Marikana massacre in August, Motsepe said the events at Lonmin fundamentally impacted on the company and industry’s ability to grow and create jobs.
“For us as an industry, we live in volatile times,’ Motsepe said. “ARM is in this for the long term, but we also have to be aware of what our shareholders are saying.
“We have no choice as a country but to keep it an attractive investor destination.’
He said that while some players in the union movement had to adjust to maintain their relevance, he thought they would be able to adapt.
“Whether it’s unions or political parties, they need to grow and show they’re still relevant,’ he said. He said the mining industry also shouldn’t be scared to make a stand when unions made unrealistic demands.
“We’ve got to draw a line and say we cannot afford to give you what you want,’ he said.
Salient figures for the year under review included a 2% increase in headline earnings to R3.45bn, despite an 18% increase in sale to R17.53bn. The company declared a dividend of 475c per share. The company’s net cash position was R2.3bn at June 30 (R2.6bn in 2011).
