EXXARO Resources held up well in the six months to end-June increasing headline earnings 13% and raising its interim dividend as management focussed on completing the major manganese acquisition announced in May.
Newly-appointed CEO Ben Magara commented that completion of the manganese deal – through which Exxaro is to buy manganese assets from Ntsimbintle Holdings which owns 50.1% of the 3.4Mt/year Tshipi Borwa mine – was his top priority.
That will cost between R11.7bn and R14.7bn in cash depending on whether related parties exercise a combination of tag-along and pre-emptive rights.
Completion of this deal holds another major benefit for shareholders in that Exxaro does not intend rebuilding its “war chest” – standing at R12.4bn net cash at the end of June – once it has paid for the manganese acquisition. Implication is that Exxaro could start paying out higher dividends in future.
Finance director Riaan Koppeschaar told a media briefing held today that management was waiting for confirmation of what the final purchase price for the Ntsimbintle manganese transaction would be.
“Then we will review our capital allocation framework. That will entail also looking at our dividend policy to see if there is a need to give more dividends to shareholders but we need to wait for the final transaction numbers before we can take final decisions on this.”
Magara said the steps needed to finalise the Ntsimbintle acquisition were “well advanced” and he was confident the deal was on track for closure during the first quarter of 2026.
He commented the Ntsimbintle shareholders had approved the transaction while Exxaro had filed its submission to the South African Competition Authority as well as it’s submission for ministerial approval under section 11 of the Mineral and Petroleum Resources Act.
Asked whether the manganese deal marked the end of Exxaro’s moves to diversify its business Magara replied, “we are still looking for opportunities but we don’t think we need to do anything as big as manganese.
“We want to review our capital allocation framework and enhance returns to shareholders. We don’t expect to rebuild the same cash buffer, “he added.
Coal sales by the group to Eskom dropped 5% to 13.2Mt (six months to end-June 2024 – 13.9Mt) while coal exports were 3% higher at 3.4Mt (3.3Mt)
Current annualised coal export levels of around 6.8Mt sit at about half of the 12Mt of coal Exxaro exported in 2021 when the group was pushing far greater export volumes from its Grootegeluk near Lephalale.
Koppeschaar commented Exxaro believed it could return coal exports to levels between 10Mt and 12Mt annually within three to five years depending on a number of variable factors including upgrades to the rail lines between Lephalale to Ogies and then to Richards Bay.
