HomeBase MetalsARM achieves record results

ARM achieves record results

A night shot of ARM’s
Nkomati Nickel
Mine showing the
operation’s various
surface facilities
Johannesburg, South Africa — MININGREVIEW.COM — 20 February, 2008 – African Rainbow Minerals Limited (ARM) – a niche, diversified South African mining company with long-life, low-cost operating assets in key commodities – achieved record results in the second half of 2007, further growing itself into a globally competitive, diversified mining company.

Announcing its interim results for the six months ended 31 December 2007 here today, ARM described itself as “well positioned to participate in the local and global merger and consolidation opportunities.”

The results statement reveals that headline earnings for the period increased by 35% to R741 million or 353 cents per share, compared to R548 million or 264 cents per share in the last six months of 2006.

“The period under review has been characterised by strong commodity prices across the businesses and a 4% stronger average Rand/US dollar exchange rate at R6.94/US dollar,” it stated. “In addition, these results have been impacted by solid volume increases from the ferrous assets held through Assmang Limited (Assmang), and sales volumes which were maintained at the platinum and nickel operations.”

Operational highlights for the period include:

  • 37% increase in manganese ore sales to 1.4 million tonnes;
  • 18% increase in iron ore sales to 3.3 million tonnes;
  • 12% increase in manganese alloy sales to 122 thousand tonnes;
  • 55% increase in domestic thermal coal sales to 7 million tonnes;
  • 9% increase in PGM sales to 243 thousand ounces;  
  • 177% increase in chrome ore sales to 653 thousand tonnes; and
  • First copper production from TEAL in the Democratic Republic of Congo (DRC)

“Operational volume increases, together with ARM’s organic growth projects, are in line with the company’s growth strategy to double production of key commodities with high margin operations from 2005 levels by 2010,” the statement continues.

“The company’s organic growth projects with its partners remain on schedule and within budget, having spent R1.4 billion (attributable to ARM) on capital expenditure over the period,” it adds.

“Khumani Iron Ore Mine is the first project to begin ramping up with export sales of ore processed through its own plant planned by the end of financial year 2008. The Nkomati Nickel and Goedgevonden Thermal Coal projects are both on track for full production by 2011,” says the results statement.

ARM continues to focus on operational cost containment through this growth phase, costs being a significant determinant of management’s remuneration. Operational cost changes are in line with the planned growth, as ARM’s mining production ramps up.

“ARM’s balance sheet remains robust with net debt (excluding partner loans) of R2.1 billion in 2007,” it continues. “Earnings were R1 740 million (2006: R1 265 million).”

The national power shortage has somewhat impacted production and processing at most of ARM’s operations, but there has been a compensating price spike for the majority of its commodities. The company’s shallow operations enable it to make significant use of diesel, which significantly reduces the safety and operational risks that may arise due to power cuts.

“ARM is reviewing all its operations to ensure that production is maximised in the most efficient and profitable manner at a 90% average level of power supply,” the statement concludes.