[miningmx.com] — KUMBA Iron Ore on Thursday declared a record interim dividend as higher export iron ore prices more than made up for weather-related production losses.
Reporting financials for the six months to end-June, the company said it would pay back R7bn to shareholders, equating to R21.70 per share and a 60% increase on 2010’s R13.50.
The dividend came on the back of an increase in interim revenue to R24.1bn and headline earnings of R9.1bn, up 40% (R28.23/share). The operating profit was up 51% to R16.9bn.
This performance followed a weighted average increase of 56% in export iron ore prices, though partially offset by the continued strength of the rand (an average of R7.52 per dollar for the whole of 2010, compared to R6.88 so far in 2011).
“Management has implemented focused plans to recover the majority of the shortfall in first half production by the end of 2011,” CEO Chris Griffith said in a statement.
“Waste mining at Sishen mine is anticipated to increase as rainfall patterns return to normal. Production and export sales for 2011 are expected to remain stable with 2010 levels. Crude steel production during the second half of the year is seasonally lower than the first half putting modest downward pressure on iron ore prices for the remainder of 2011.”
Total tonnes mined at Sishen increased by 6% to 76.7 million tonnes (mt), of which waste mined was 51.8 mt, a corresponding increase of 12%. The mine had planned to increase waste mining, but these were adversely affected by heavy rain falls.
The wet pits reduced run of mine material supplied to the dense separation plant, causing total production at Sishen to decrease 12% to 18.6 mt.
In its outlook for the second half of 2011, Kumba said world steel production is expected to ease back due to stock cycle turns, with global crude steel production anticipated to increase by approximately by 6%.
“This is expected to put modest downward pressure on iron ore prices,” Kumba said.
LEGAL UPDATE
Kumba said the High Court review application on the decision of the department of mineral resources to grant a 21.4% prospecting right to Imperial Crown Trading 289 was due to proceed in August.
“The private arbitration between Sishen Iron Ore and ArcelorMittal SA with regard to the lapse in contract mining agreement is due to start in May 2012,” the group said.
The company also announced that Vincent Uren would step down as CFO at the end of 2011. He would continue at Kumba in 2012 to work exclusively on legal issues.
