[miningmx.com] – AFRICAN Rainbow Minerals (ARM) injected some good cheer into the battered resource investment market lifting the dividend just over 7% to 510 cents per share as the group’s platinum and coal assets improved production.
A 55% improvement in the contribution to headline earnings for the year ended June from ARM’s platinum division, and a R185m contribution from the group’s coal assets, 185% higher year-on-year, helped drive the results.
The major swing factor in ARM’s performance, however, was the R362m turnaround in fortunes year-on-year staged by the group’s Nkomati nickel mine. The mine produced a two-thirds improvement in production to 23,220 tonnes, more than its 20,500 tonnes steady-state production level.
Naturally, there are headwinds. ARM’s Lubambe copper mine delivered concentrate to Mopani Mines in Zambia that fell beneath the quality required in the offtake agreement with the result that only 2,618 tonnes were smelted of some 17,878 tonnes produced.
As a result, ARM’s copper unit deepened losses year-on-year to R135m compared to R31m in the 2012 financial year. Lubambe is a project in build-up phase, however.
The group said it was working on the concentrate quality problems while Lubambe mine itself was still targeting 45,000 tonnes/year by 2015.
The outcome was an 8% improvement in ARM’s headline earnings year-on-year to R3.74bn. Cash net of loans to its joint venture partners – which stands at about R2bn – increased to R2.7bn from R2.3bn previously.
ARM said its strategy in a ‘flat’ mining market was to drive operational efficiencies and have its operations below the 50th percentile of each commodity’s respective global cost curve. It also said it would consider acquisitions as a part of its capital allocation planning.
