Wrap Text
Condensed Reviewed Results for the Financial Year Ended 30 June 2024 and Final Cash Dividend Declaration
African Rainbow Minerals Limited
(Incorporated in the Republic of South Africa)
(Registration number 1933/004580/06)
JSE Share code: ARI
ISIN: ZAE000054045
("ARM" or the "Company")
CONDENSED REVIEWED RESULTS FOR THE FINANCIAL YEAR ENDED 30 JUNE
2024 AND FINAL CASH DIVIDEND DECLARATION
This short form announcement is the responsibility of the board of
directors of ARM (the "Board") who acknowledge their responsibility
to ensure the integrity of the condensed group financial results.
The details contained in this announcement are only a summary of
the information in the full announcement and do not contain full
details of the Company's financial performance and position or other
relevant information about the business for the financial year under
review. Any investment decisions by investors and/or shareholders
should therefore be based on the full announcement published on the
Company's website at www.arm.co.za and which is available on the
following link:
https://senspdf.jse.co.za/documents/2024/jse/isse/ARIM/FY2024.pdf
The full announcement is also available for inspection free of charge
during business hours (excluding weekends and public holidays) from
Friday, 06 September 2024 at the registered office of ARM at ARM
House, 29 Impala Road, Chislehurston, Johannesburg. In addition,
copies of the full announcement may be requested by emailing the
Company's investor relations department on hoosain.parker@arm.co.za
Salient features
Financial:
- Headline earnings for the year ended 30 June 2024 (F2024)
decreased by 43% to R5 080 million or R25.91 per share (F2023:
R8 983 million or R45.82 per share restated)
- Revenue for the year ended 30 June 2024 decreased by 20% to R12
921 million(F2023: R16 097 million)
- A final dividend of R9.00 per share is declared (F2023: R12.00
per share). In addition to the interim dividend of R6.00 per
share (F2023: R14.00 per share) paid on 8 April 2024, this
brings the total dividend for F2024 to R15.00 per share (F2023:
R26.00 per share)
- ARM maintained a robust financial position, with net cash of R7
197 million at 30 June 2024 (30 June 2023: R9 779 million).
Operational:
- The decline in the average US dollar 6E platinum group metals
(PGM) basket price and lower thermal coal prices was partially
offset by a weaker average rand/US dollar exchange rate and
higher average realised export iron ore prices
- Unit costs remained under pressure due to lower production
volumes, above-inflation increases in electricity costs, and
higher waste-stripping expenses at the iron ore operations.
Safety and Health:
- Regrettably, a team leader was fatally injured in a fall-of-
ground accident at Bokoni Platinum Mine. We extend our deepest
condolences to his family, friends and colleagues
- The group lost time injury frequency rate (LTIFR) improved to
0.22 per 200 000 man-hours (F2023: 0.27)
- The group total recordable injury frequency rate (TRIFR)
improved to 0.50 (F2023: 0.62).
Environmental:
- Water supply to Khumani Mine remains a risk – refurbishment of
the Vaal Gamagara pipeline has not yet started, resulting in
reliance on the dewatering programmes of neighbouring mines.
The long-term solution is the urgent start of phase 2 of
refurbishing the Vaal Gamagara pipeline, which is being
addressed as a key priority
- Construction of the solar photovoltaic (PV) power plant is on
schedule and the project is on target for 100MW of power to be
delivered to ARM Platinum by August 2025.
Growth:
- ARM acquired 15% of Surge Copper Corp (Surge) on 31 May 2024.
Surge is a Canadian company that owns a large, contiguous
mineral-claim package that hosts multiple advanced porphyry
deposits with pit-constrained NI 43-101-compliant resources of
copper, molybdenum, gold and silver
- A decision was made to put the Two Rivers Merensky project on
care and maintenance from July 2024, driven by the current
downward cycle in the PGM market. The restart of this project
will be evaluated when PGM prices have recovered
- At Bokoni Mine, the current priority is to conserve cash while
ramping up production in a phased and measured manner, given
depressed commodity prices. This approach will maximise the use
of Bokoni's existing surface and concentrator plant
infrastructure, reducing capital costs. Subsequent to year end,
the construction of a chrome recovery plant was approved by the
board.
Safety performance
We are committed to maintaining a safe and healthy work environment
for all employees and contractors.
Our operations delivered improved safety performance. The group LTIFR
per 200 000 man-hours improved to 0.22 (F2023: 0.27), while the TRIFR1
improved to 0.50 (F2023: 0.62).
Regrettably, there was a fatality at Bokoni Platinum Mine when Mr
Thomas Ubisse, a team leader, was fatally injured in a fall-of-ground
accident during the dayshift on 16 June 2024 at Middelpunt Hill shaft.
Support and counselling was offered to all affected employees and Mr
Ubisse's family members through the employee assistance programme. We
extend our sincere condolences to his family, friends and colleagues.
Independent root-cause investigations are underway. We continue to
work towards ensuring zero harm at our operations.
Black Rock Mine reached 12 million fatality-free shifts and Modikwa
Mine 3 million fatality-free shifts, which took 15 years and two years
respectively to achieve. Beeshoek Mine has been fatality-free for 21
years.
Financial performance
Headline earnings for F2024 decreased by 43% to R5 080 million or
R25.91 per share (F2023: R8 983 million or R45.82 per share restated).
The decline in headline earnings was mainly due to the decline in the
average US dollar 6E PGM basket price and the lower thermal coal
prices. This was partially offset by a weaker average rand/US dollar
exchange rate and higher average realised export iron ore prices.
The average realised rand weakened by 5% versus the US dollar to
R18.70/US$ compared to R17.76/US$ in F2023. For reporting purposes,
the closing exchange rate at 30 June 2024 was R18.25/US$ (30 June
2023: R18.90/US$).
ARM Ferrous headline earnings were 9% lower at R5 058 million (F2023:
R5 528 million), driven by a 90% decrease in headline earnings in
the manganese division. This was partially offset by a 19% increase
in headline earnings in the iron ore division.
Iron ore headline earnings include a R22 million(pre-tax) negative
fair value adjustment on sales(F2023: R279 million negative
adjustment). The fair value adjustment comprises a R28 million
positive fair value based on confirmed prices and a R50 million
negative fair value adjustment based on forward prices.
Lower headline earnings in manganese ore were mainly driven by a
decrease in the average realised US dollar manganese ore prices,
adjustments in sales mix arising from lower grade products being
sold as well as increased railage tariffs. This was partially offset
by higher sales volumes and the weaker rand/US dollar exchange rate.
Lower headline earnings in manganese alloys were driven by lower
sales volumes due to lower demand, a significant decrease in
ferromanganese prices and an increase in provisions for onerous
contracts and restoration.
Higher headline earnings in the iron ore division were driven by an
increase in average realised US dollar iron ore prices, slightly
higher sales volumes, as well as the weaker rand/US dollar exchange
rate, partially offset by higher mining costs and higher railage
expenses.
ARM Platinum headline earnings decreased 162% to a headline loss of
R910 million (F2023: R1 465 million earnings).
Two Rivers Mine headline earnings reduced to R168 million (F2023: R1
262 million), which includes a negative mark-to-market adjustment of
R193 million (F2023: R1 065 million negative mark-to-market
adjustment). The decrease in headline earnings was mainly due to a 33%
decline in the average basket price and a 17% increase in unit cash
costs (on a rand per 6E PGM ounce basis). The above-inflationary
increase in unit costs results from increased milling of Merensky ore.
The Merensky ore arose out of the development of the Merensky shaft
and came at a higher cost than UG2 ore.
Modikwa Mine reported a 115% decline in headline earnings to a headline
loss of R121 million (F2023: R819 million earnings), largely driven
by a 35% decrease in the average basket price. The mine's production
increased marginally, while unit cash costs (rand per 6E PGM ounce)
increased by 6%.
Bokoni Mine reported a headline loss of R566 million (F2023: R406
million) driven mainly by the mine ramping up to its first PGM ounce
production. The first PGMs were produced in November 2023, and unit
cash costs are within the range expected from production ramp-up.
Bokoni results were included for 10 months in F2023, following its
acquisition on 1 September 2022, compared to the 12 months included
in F2024.
For more detail and a table showing the mark-to-market adjustments at
Two Rivers and Modikwa mines, refer to page 14 of the full
announcement.
Nkomati Mine reported an attributable headline loss of R391 million
(F2023: R210 million). This was driven mainly by an increase in the
provision for rehabilitation in F2024 due to higher water management
costs arising from the water treatment plant. The mine was placed on
care and maintenance on 15 March 2021. ARM and its joint-venture
partner have concluded a purchase and sale agreement.
ARM Coal reported headline earnings of R391 million (F2023: R1 535
million), driven mainly by a reduction in the realised coal price at
GGV and PCB of 33% and 36%, respectively.
GGV Mine's headline earnings were R331 million (F2023: R540 million).
PCB headline earnings were R60 million (F2023: R995 million).
Refer to pages 18 and 19 in the full announcement for a detailed
analysis of the GGV and PCB operational profit performance.
ARM Corporate and Other (including Gold) reported headline earnings
of R762 million (F2023: R651 million restated). Included in ARM
Corporate and Other are dividends received from Harmony of R166 million
(F2023: R17 million).
Machadodorp Works headline loss of R221 million (F2023: R196 million)
related to research on developing energy-efficient smelting
technology.
Basic earnings and impairments
Basic earnings of R3 146 million or R16.04 per share (F2023: R8 080
million or R41.21 per share restated) included attributable
impairments as follows:
- An impairment of property, plant and equipment at Two Rivers Mine
of R1 097 million after tax and non-controlling interests
- An impairment of property, plant and equipment at Modikwa Mine
of R376 million after tax and non-controlling interests
- An impairment of property, plant and equipment at Beeshoek Mine
of R422 million after tax
- An impairment of property, plant and equipment at Cato Ridge
Works of R29 million after tax
Refer to note 4 of the condensed group financial statements in the
full announcement for further details.
Financial position and cash flow
At 30 June 2024, ARM had net cash of R7 197 million (30 June 2023: R9
779 million), a decrease of R2 582 million compared to the end of the
2023 financial year, largely driven by an increase in borrowings of
R887 million. This amount excludes attributable cash and cash
equivalents held at ARM Ferrous (50% of Assmang) of R4 476 million (30
June 2023: R4 939 million).
Cash generated from operations decreased by R6 319 million to R1
771 million (F2023: R8 090 million) after an outflow in working
capital of R130 million (F2023: R1 212 million inflow). This was
mainly due to an outflow in trade payables and reduction in
receivables inflow.
In F2024, ARM paid R3 529 million in dividends to its shareholders,
representing the interim dividend of R6.00 and final dividend of
R12.00 per share declared for F2023(F2023: R6 666 million
representing the interim dividend of R14.00 and F2022 final dividend
of R20.00 per share).
Net cash outflow from investing activities was R6 556 million (F2023:
R7 511 million) and included R4 742 million additions to property,
plant and equipment to expand operations. Of this, R3 138 million
was attributable to the Merensky project.
Borrowings of R62 million (F2023: R251 million) were repaid and
borrowings of R935 million raised during the period, resulting in
gross debt of R1 129 million at 30 June 2024 (30 June 2023: R242
million).
Investing in growth and the existing business
Surge Copper
ARM acquired 15% of Surge Copper Corp (Surge) on 31 May 2024. Surge
is a Canadian company that is advancing an emerging critical metals
district in a well-developed region of British Columbia, Canada.
The company owns a large, contiguous mineral claim package that
hosts multiple advanced porphyry deposits with pit-constrained NI
43-101-compliant resources of copper, molybdenum, gold and silver –
metals that are critical inputs to the low-carbon energy transition
and associated electrification technologies.
Surge owns a 100% interest in the Berg project, which is in the
north-western portion of the company's 100%-owned 125 499-hectare
contiguous land package in the Berg-Huckleberry-Ootsa district.
Surge announced an NI 43-101-compliant maiden preliminary economic
assessment (PEA) and an accompanying Mineral Resource estimate on
the Berg project in June 2023, outlining a large-scale, long-life
project with a simple design and high outputs of critical minerals
located in a safe jurisdiction near world-class infrastructure. The
Berg deposit contains pit-constrained 43-101-compliant resources of
copper, molybdenum, silver and gold in the Measured, Indicated and
Inferred categories.
The company also owns a 100% interest in the Ootsa property, an
advanced-stage exploration project containing the Seel and Ox
porphyry deposits adjacent to the open-pit Huckleberry Copper Mine,
owned by Imperial Metals. The Ootsa property contains pit-
constrained NI 43-101-compliant resources of copper, gold,
molybdenum and silver in the Measured, Indicated and Inferred
categories.
Bokoni Mine
The current priority is to conserve cash while ramping up production
in a phased and measured manner, given depressed commodity prices.
This approach will maximise the use of Bokoni's existing surface
and concentrator plant infrastructure, reducing capital costs.
Subsequent to year end, the construction of a chrome recovery plant
was approved by the board. We remain confident of the long-term
profitability of Bokoni.
Existing operations
We continued to invest in our existing operations with segmental
capital expenditure of R8 564 million for the period (F2023: R7 201
million). The increase in capital expenditure was mainly due to the
Merensky Project at Two Rivers Mine.
Capital expenditure for the divisions is shown on page 7 of the full
announcement and discussed in each division's operational
performance section from page 8 of the full announcement.
Dividend declaration
ARM aims to pay ordinary dividends to shareholders in line with our
dividend guiding principles. Dividends are at the discretion of the
board of directors, which considers the Company's capital allocation
guiding principles and other relevant factors such as financial
performance, commodities outlook, investment opportunities, gearing
levels as well as solvency and liquidity requirements of the
Companies Act.
For F2024, the board approved and declared a final dividend of 900
cents per share (gross) (F2023: 1 200 cents per share). The amount
to be paid is approximately R2 022 million.
The dividend declared will be subject to dividend withholding tax.
In line with paragraphs 11.17(a) (i) to (x) and 11.17(c) of the JSE
Listings Requirements, the following additional information is
disclosed:
- The dividend has been declared out of income reserves
- The South African dividends tax rate is 20%
- The gross local dividend is 900 cents per ordinary share for
shareholders exempt from dividends tax
- The net local dividend is 720.00000 cents per share for
shareholders liable to pay dividends tax
- At the date of this declaration, ARM has 224 667 778 ordinary
shares in issue
- ARM's income tax reference number is 9030/018/60/1.
A gross dividend of 900 cents per ordinary share, being the dividend
for the year ended 30 June 2024, has been declared payable on Monday,
7 October 2024 to those shareholders recorded in the books of the
Company at the close of business on Friday, 4 October 2024. The
dividend is declared in the currency of South Africa. Any change in
address or dividend instruction applying to this dividend must be
received by the Company's transfer secretaries or registrar no later
than Friday, 4 October 2024. The last day to trade ordinary shares
cum dividend is Tuesday, 1 October 2024. Ordinary shares trade ex-
dividend from Wednesday, 2 October 2024. The record date is Friday,
4 October 2024 while the payment date is Monday, 7 October 2024.
No dematerialisation or rematerialisation of share certificates may
occur between Wednesday, 2 October 2024 and Friday, 4 October 2024,
both dates inclusive, nor may any transfers between registers take
place during this period.
Review by independent auditor
The condensed group financial statements set out on pages 26 to 76
of the full announcement for the financial year ended 30 June 2024
have been reviewed by the Company's registered auditor, KPMG Inc.
(the partner in charge is Safeera Loonat CA(SA)) who expressed an
unmodified conclusion on these results. The full review report can
be found on page 25 of the full announcement and on www.arm.co.za.
ENDS
For all investor relations queries please contact:
Hoosain Parker
Manager: Investor relations and corporate development
Tel: +27 11 779 1300
E-mail: hoosain.parker@arm.co.za
Johannesburg
6 September 2024
Sponsor: Investec Bank Limited
Date: 06-09-2024 07:05:00
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