Metorex focuses on cutting debt

[] — DIVERSIFIED South African miner Metorex posted a disappointing set of annual results and it is forging ahead with plans to reduce debt after a spate of asset sales during the course of the year.

“The liquidity situation in the Group has been improved through increased production, higher commodity prices and the sales of Pan African, Phoenix Platinum and a 15% stake in the Vergenoeg mine,” said CEO Terence Goodlace.

The asset sales raised R567m, which Metorex used towards funding its Ruashi copper and cobalt project in the Democratic Republic of Congo (DRC), repaying bridging loans, funding Copper Resources Corporation as well as closing Consolidated Murchison’s onerous hedge book for R41m and absorbing that mine’s losses.

Debt within the company rose to R2.1bn by the end of the financial year, a 41% increase from the previous year.

Consolidated Murchison, an antimony and gold operation, is up for sale.

“Further strategies designed to restore the balance sheet by December 2009 are being vigorously progressed and management is confident of a successful outcome,’ Goodlace said.

Mining profit for the year to end-June 2009 fell to R263m from R799m a year earlier.

Metorex took a R2.3bn impairment charge related primarily to its CRC investment, which it wrote down by R1.7bn. Consolidated Murchison was written off at a cost of R125m and the Ruashi first phase was discontinued as it moved into the second phase. This resulted in an impairment of R216m.

Metorex’s headline earnings per share fell significantly to 24 cents for the year, excluding the effect of the impairment charges. Cash inflows from operating activities reduced by 84% to R122m.

Metorex secured net cash inflows of R1.2bn from financing activities, which primarily resulted from new debt of R282m introduced at Chibuluma, further project loans at Ruashi of R125m, bridge loan draw downs of R132m and new equity of R704m at the Metorex corporate level.

Meanwhile, Ruashi turned in a strong June quarter performance, producing 5,245 tonnes of copper, well above the 4,500 tonne target. Cobalt production also exceeded the 450 tonnes forecast with 571 tonnes.