Merafe guides to full year basic earnings of up to 34% higher

MERAFE Resources, the Johannesburg-listed ferrochrome producer said in a trading statement on Monday basic earnings for the year ended December 31 would be higher owing to rand weakness against the dollar, and higher sales and prices.

Basic earnings would come out between 64.5 and 75.7 South African cents per share compared to the previous year’s earnings of 56.4c/share. At the headline earnings level, which includes non-recurring items, earnings of 58.7 to 69.9c/share were forecast.

Cash and cash equivalents as of December 31 were R1.66bn, a slight increase over R1.6bn in cash and equivalents at the same time in 2022. Included in the cash is money set aside for future environmental rehabilitation obligations totalling an attributable R328m.

Merafe’s results are presented as attributable numbers based on its 20.5% stake in the Glencore Merafe Joint Venture with Swiss miner and marketing company, Glencore. The full year results are due to be presented to the market on March 18.

Merafe is likely to be questioned about the extent to which state-owned Eskom and Transnet Freight Rail have impeded the business. Merafe’s smelters are energy intensive while it relies on Transnet as the miner is a supplier of bulk minerals.

The joint venture said in September that it would extend an agreement to produce platinum group metals (PGMs) which occurs as a by-product of chrome.

This will involve the expansion of a processing plant on the eastern half of the Glencore-Merafe controlled chrome properties with a cost of R117m (R585m in total) falling due to Merafe in terms of its 20.5% stake in the joint venture.