South Africa-focused base metals company Assore anticipates a drastic decline in its headline earnings for the six months to 31 December 2015 largely as a result of weak iron ore prices.
The US dollar export selling prices for all of its products have declined over the six month period and are significantly lower than those which prevailed over the six months to December 2014 the company states.
Average prices for iron ore (fines grade delivered in China) for the current period were approximately $51 per metric ton, compared to $82 per metric ton for the previous period, a decline of 38%.
Although the impact of these lower prices on earnings was partly offset by a weaker Rand/dollar exchange rate during the current period, it was still on average 25% weaker than the previous period.
In addition, Assore’s share portfolio has declined in value over the current period and it has recorded an impairment charge, net of taxation relief, of R71 million in this regard.
Based on the trading conditions for the first half of the financial year to 31 December 2015, headline earnings are anticipated to decline to between R548 million (by 44.6%) and R672 million (by 32.1%) compared to R990 million recorded in the first half of the previous financial year.
Attributable earnings are anticipated to decline to between R455 million (by 51.3%) and R557 million (by 40.4%) compared to R935 million recorded in the first half of the previous financial year.
Dwarsrivier chrome mine sale
In June last year Assore announced it would acquire the Dwarsrivier chrome mine from Assmang. Ministerial consent has now been received from the Department of Mineral Resources for the transaction. Completion of the transaction is expected to occur once the remaining conditions precedent have been addressed.