HomeBase MetalsMetorex earnings and profits soar

Metorex earnings and profits soar

Workers stack copper
coming off the line
at Metorex’s Sable
processing facility
in Zambia
Johannesburg, South Africa — MININGREVIEW.COM — 21 February, 2008 – The Metorex Group – a mid-tier, multi-commodity company listed on the JSE and with a secondary listing on the London Stock Exchange – experienced a highly successful second half of 2007 with substantial increases in earnings, profits and copper production.

“I’m very pleased with our financial performance, which continued strongly in the first half of our financial year – most notably, with the increase in revenues, up 30%, and mining profit up 39%, over the last period,” says Metorex chief executive Charles Needham. “Operationally, we saw a significant increase in copper production, up 47%, as well as overall improved margins – most notably from the Base Metals Division.”

Releasing its interim results for the six months ended 31 December 2008 here today, the company said it had produced most satisfactory results and cash flows, driven by significant volume growth from its base metal division.

Gross revenues increased by 31% from R791 million to over R1 billion, which translated into a 37% increase in cash mining profits to R387 million, the results statement revealed. Group operating costs increased by 24% to R541 million following volume increases at Chibuluma in Zambia and Ruashi in the Democratic Republic of Congo (DRC).

Net income in the six months ended Dec. 31 rose to R279.3 million or 80.8 cents a share, compared with R150.4 million or 49.4 cents, a year earlier, according to the company.

The Group’s EBITDA of R538 million included a profit of R158 million on the reversal of Barberton Mines into Pan African Resources Plc (PAR) for a 55% shareholding in the combined entity. Excluding non-operating profit, EBITDA increased by 36% to R380 million from the comparable period.

Headline earnings per share rose by 5% to 54 cents, which was affected by an increase of 14% in the weighted average number of shares in issue, due to the acquisition of further interests in Ruashi Phase II and Copper Resources Corporation (CRC), both of which will contribute to earnings in the future.

The results statement adds that the group’s balance sheet further strengthened with equity attributable to its shareholders increasing by R1 billion to R3 billion, following significant earnings generation, as well as share issues mainly related to the CRC acquisition.

Net asset value increased by 42% and the group’s current ratio improved to a healthy 1.76. Following project finance drawdowns for the development of the Ruashi Phase II project, the group’s debt to equity gearing increased to 30% and is expected to peak at 35% by June 2008.

The group’s cash generated by operations increased by 34% to R300 million for the period. Cash spent on capital expenditure, the acquisition of Phoenix Platinum Limited, CRC and a further interest in Ruashi amounted to R1 086 billion. This was funded by the Wakefield sale proceeds of R338 million, external financing of R605 million, and internal cash generation.

Group capital expenditure totalled R795 million (compared to R200 million in2006), mainly related to the Ruashi Phase II project. In addition to the abovementioned capital expenditure, the acquisitions of Phoenix and PAR accounted for a R763 million increase in mineral rights, gross of the effects of deferred tax raised in terms of IAS 12: Income Taxes.

Contracted capital commitments at 31 December 2007 amounted to R458 million (compared to R57.5 million in 2006, while un-contracted commitments amounted to R36.8 million (compared to R1 260 million in 2006).

Operating lease commitments due within the next year amount to R7.3 million, while other commitments of R13.3 million fall due during the next four years.

“While certain challenges still lie ahead, I am confident we will have a productive outcome and we can look forward to a robust performance over the second half of our 2008 financial year,” said Needham.

The group remains committed to its strategy of being a leading mid-tier multi-commodity mining group, focused on high-grade, long-life ore bodies in sub-Saharan Africa.

While commissioning and earnings deferrals have occurred at Ruashi II and at the Sable Zinc project, a significant pipeline of new projects is in place – including the CRC Kinsenda project, the Phase II Ruashi project, PAR’s exploration projects, the Vergenoeg expansion and Phoenix – which should significantly increase the group’s earnings over the next two years.