Joining the big league
1 September 2008
African Rainbow Minerals Limited today announced it’s Provisional Results for the financial year ended 30 June 2008.
- Record headline earnings increase of 232% from R1.2 billion to R4.0 billion or 1 906 cents per share
- Profit from operations before exceptional items increase of 169% from R2.5 billion to R6.7 billion
- Dividend increases 167 % to 400 cents per share
- Record sales volumes in manganese ore, chrome ore, PGMs and thermal coal
- Cash balances increase by R1.6 billion to R2.6 billion
- Market capitalisation increases 85% from R26 billion at F2007 year end to R48 billion at 25 August 2008
- Khumani Iron Ore mine and plant substantially commissioned on time and within budget
- Two Rivers repays bank debt well ahead of schedule
The company announced exceptional results for the financial year ended 30 June 2008 as it delivers on its 2 x 2010 volume growth strategy, which coincides with record commodity prices. ARM reported significant increases in earnings contributions from ARM Platinum, ARM Coal and notably from ARM Ferrous. Headline earnings have increased by 232% to R4.0 billion (F2007: R1.2 billion), or 1 906 cents per share. The ARM Ferrous contribution to headline earnings attributable to ARM increased to R2.8 billion and comprises 69% (F2007: 55%) of ARM’s headline earnings.
Executive Chairman Patrice Motsepe said: “During the past financial year ARM tripled headline earnings, increased dividends by 167% and is exceeding its 2005 objective of doubling production by 2010.”
Operational highlights for the year include (100% basis, except for PGM production):
- 96% increase in Nkomati chrome ore sales to 1.2 million tonnes
- 60% increase in manganese ore external sales to 3.7 million tonnes
- 47% increase in domestic thermal coal sales to 13.2 million tonnes
- 8% increase in attributable PGM production to 281 337 ounces
These excellent results have been delivered in conjunction with our partners at the various operations, namely Anglo Platinum, Assore, Impala Platinum, Norilsk Nickel and Xstrata Coal.
The production and sales volume increases are especially significant this year, given the cutbacks and load shedding the operations have experienced from electricity utility Eskom. In the event that electricity cutbacks continue, ARM operations have put various mitigating and contingency plans in place at all operations to ensure minimal impact on volume production and sales.
Part of ARM’s strategy is to ensure the efficiency and cost competitiveness of all its operations. ARM is aiming to maintain and target its production costs to be positioned at the bottom 50th percentile on the global unit cost curve by 2012. Mining costs for the last year have been substantially above inflation and all operations have experienced high cost pressures, in particular relating to diesel, power, explosives, reductants, and labour. ARM has been able to temper unit cost increases by production volume increases and operational efficiencies. With the exception of iron ore, which is mainly due to transport costs, ARM’s operations have managed to maintain unit cost increases at less than 10% above inflation, despite these cost increases, ARM’s EBITDA margins have improved to 57%.
As a responsible South African corporate citizen, the health and safety of ARM’s employees are of paramount importance. Our performance in this area over the reporting period has been mixed: we have made some progress in certain areas but there is still room for improvement in other areas.
ARM is particularly satisfied with the progress of its projects all of which remain on schedule and within budget. This is being achieved despite the challenges presented by cost pressures, electricity constraints and skills shortages.
Chief Executive Officer Andr� Wilkens said: “As ARM starts the new financial year, we remain confident that the company will continue to be well positioned in terms of our commodity mix, our excellent long-life low-cost operations, our future projects and expansion prospects, as well as access to resources in a region of the world which is renowned for its dominance in a number of these commodities.”
The accelerated growth in ARM’s operational cash flows during F2008 has resulted in a marked improvement in its net debt position.
Accordingly, the Board of Directors has decided to declare an increased dividend of 400 cents per share which represents a 167 % increase over the maiden dividend in F2007. This dividend is covered 4.77 times by headline earnings. This dividend is especially significant given the Company’s continued capital investment programme, having invested R2.8 billion in capital projects over the period, with a further R12 billion planned over the next three years, signalling ARM’s healthy growth profile across commodity groups.
For more information please contact:
Corporate Development & Head of Investor Relations
Office: +27 11 779 1507
Mobile: +27(0) 83 411 2881