AFRICAN Rainbow Mineral’s (ARM’s) attempt to breathe fresh life into Bokoni Platinum, a mine in South Africa’s Limpopo province, cost it dear in the 12 months ended June.
Reporting its full year results on Friday, ARM said it had written down Bokoni for R2.2bn. The write-down took the group’s platinum group metal (PGM) division into an overall R1.3bn loss which follows R1.74bn in group impairments last year – mainly in its PGM assets.
Commenting on Bokoni, ARM said it had suspended production while it focused on ore development at the mine, the cost of which led to an asset level R1.4bn headline loss.
Bokoni, situated in the northern section of the Bushveld Complex, was bought in 2021 for about R3.5bn. ARM also pencilled in R5.3bn in capital development but pulled back on its expansion plans as PGM prices slumped – a downcycle that lasted until early 2025.
While prospects for PGM miners are now significantly improved, partly owing to a 50% improvement in the platinum price this year, Bokoni’s underperformance – and a loss at Modikwa platinum mine – came just as iron ore and coal prices also slumped.
The former contributed to a 31% decline in profits for ARM’s ferrous division which, until recently also included ferromanganese.
In June, ARM announced it would shut its Cato Ridge ferromanganese smelter, sell properties to Assore, and dispose of its stake in Sakura Ferroalloys – a smelter complex in Malaysia – to it joint venture partner in Assmang, Assore.
On the bright side, ARM received about R250m in dividends from its 12% stake in Harmony Gold which is currently riding the crest of a wave. In June, ARM announced it had hedged 24% of its stake in Harmony Gold by means of put and call options that analysts say could pave the way for a period of merger and acqusition activity for ARM.
The read-out on the last financial year makes for grim reading for ARM’s shareholders, however. Headline earnings for the 12 months ended June fell 47% to R2.69bn. The lower earnings include additional impairments of R139m at Assmang and R36m at Sakura.
Cash generated from operations decreased by R1.73bn to R45m during the 12 months leaving ARM with net cash as of June 30 of R6.6bn, a year-on-year decline of R588m. This net cash number excludes R3.57bn held in net cash in the Assmang joint venture.
ARM declared a final dividend of R6 a share (2024: R9/share) bringing the total dividend declaration for the year to R10.50/share (R15/share).
Shares in the company are 19% higher this year, partly on expectations better PGM prices will see improved group profitability. While thermal coal prices have not stirred greatly, the market has stabilised for the fuel.
