ARM FY headline earnings to increase; company sets R330m aside for silicosis claims

JOHANNESBURG (miningweekly.com) – Diversified miner African Rainbow Minerals (ARM) expects its headline earnings a share for the 2017 financial year to be between R16.25 and R17.02, 229% to 245% higher than the headline earnings a share of R4.94 achieved in the 2016 financial year.

The JSE-listed company noted in a trading statement on Monday that its headline earnings for the year ended June 30 had been positively impacted on by an increase in the average dollar commodity prices, which was partly offset by the negative impact of a stronger rand/dollar exchange rate.

Cost containment initiatives throughout the year had also yielded positive results, with most operations achieving unit production cost increases at or lower than inflation.

Meanwhile, basic earnings a share are expected to increase to between R6.95 and R7.45, compared with a basic loss a share of R2.65 in the 2016 financial year.

Basic earnings were impacted on by a R711-million attributable impairment of the Nkomati mine assets; a R734-million attributable impairment on its Modikwa assets; and a R144-million attributable partial impairment reversal of the Lubambe mine assets.

SILICOSIS CLAIMS
ARM has, meanwhile, made a R330-million provision for the possible settlement of silicosis and tuberculosis (TB) class action claims.

The company is part of a working group that was established in 2014 to deal with issues relating to the compensation and medical care for occupational lung diseases in the gold mining industry in South Africa. The working group also includes Harmony Gold, Anglo American South Africa, AngloGold Ashanti, Gold Fields and Sibanye Gold.

A consolidated application was brought against several South African mining companies, including ARM, for certification of a class action on behalf of current or former mineworkers (and their dependants), who have allegedly contracted silicosis and/or TB while working for one or more of the mining companies listed in the application.

In May 2016, the South Gauteng High Court ordered the certification of two classes – a silicosis class and a TB class – and that the common law be developed to provide that, where a claimant commences suing for general damages and subsequently dies before close of pleadings, the claim for general damages will transmit to the estate of the deceased claimant. 

The High Court ruling did not represent a ruling on the merits of the cases brought against the mining companies.

The Supreme Court of Appeal granted the mining companies leave to appeal against all aspects of the May 2016 judgment. The appeal hearing before the Supreme Court of Appeal is scheduled to be heard between March 19 and 23, 2018.

ARM's results will be published on September 7.