African Rainbow Minerals dividend payout soars to record level

JOHANNESBURG (miningweekly.com) – Diversified mining company African Rainbow Minerals (ARM), which saw its headline earnings soar in the 12 months to June 30, has catapulted its dividend to heady heights.

The 189%-higher dividend of 650c a share is ARM’s highest dividend to date and the eleventh consecutive yearly dividend paid by the company, headed by executive chairperson Patrice Motsepe.

Higher dollar prices were realised for all the commodities, which comprise iron-ore, manganese ore, manganese alloy, nickel, copper, coal and platinum.

Costs were contained to levels below inflation for all commodities bar platinum, with production cost increases at the Modikwa and Two Rivers platinum mines being in line with inflation.

The company lowered net debt to R1 271-million from R4 235-million as at June 30, 2016, with ARM and Vale announcing the disposal of their 80% interest in Lubambe Mine for $97-million.

ARM's interest in Two Rivers will increase to 54% on execution of Two Rivers' amended mining right, which is said to be imminent, and ARM and Glencore Operations South Africa are in discussions to improve ARM's debt obligations on its partner loans.

Headline earnings soared 204% to R3 196-million and headline earnings a share rose to 1 684c a share compared with 494c a share in the 12 months to June 30, 2016.

Basic earnings of R1 372-million, compared with the last financial year’s basic loss of R565-million took in the R711-million after-tax impairment of the Nkomati nickel mine assets,  R734-million after-tax of the Modikwa assets and the R144-million partial impairment reversal of the Lubambe mine.

ARM Ferrous headline earnings jumped 157% to R3 709-million as iron-ore, manganese ore and manganese alloy prices recovered. Iron-ore export prices were 45% better and manganese ore export prices 93% higher than in the previous financial year.

ARM Platinum headline earnings improved by R360-million as each operation in the division improved its contribution to earnings.

There was a turnaround at Nkomati from a headline loss of R244-million in the previous year to  headline earnings of R91-million in the 12 months to June 30.

Two Rivers mine’s headline earnings were up 2% to R325-million and Modikwa reported a reduced headline loss of R66-million compared with R84-million in the 2016 financial year.

ARM Coal headline earnings of R82-million compared with a headline loss of R297-million on improvement at the company’s so-called participating coal business operations, which contributed R181-million headline earnings.

However, the Goedgevonden coal mine continued to be lossmaking as operational challenges negatively impacted on sales volumes and unit costs.

The ARM Copper headline loss was R203-million, with the sold Lubambe mine now classified as a discontinuing operation.

The corporate headline loss of R778-million includes a provision of R330-million for a possible settlement of silicosis and tuberculosis class action claims and related costs.