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Interim Results for the six months ended 31 December 2023 and 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")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2023
(1H F2024) AND 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 interim 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 six months
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/HY2024.pdf
The full announcement is also available for inspection free of
charge during business hours (excluding weekends and public
holidays) from Friday, 08 March 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
thabang.thlaku@arm.co.za
Salient features
Financial
- Headline earnings for the six months ended 31 December
2023 (1H F2024) decreased by 43% to R2 955 million or
R15.07 per share (1H F2023: R5 172 million or R26.39 per
share restated).
- An interim dividend of R6.00 per share is declared (1H
F2023: R14.00 per share).
- We maintained a robust financial position, with net cash
of R7 935 million at 31 December 2023 (30 June 2023: R9
779 million).
- Basic earnings were R1 216 million or R6.20 per share
(1H F2023: R4 388 million or R22.39 per share restated)
and include attributable impairments of R1 739 million
after tax, which were largely due to a significant
decrease in profitability resulting from lower platinum
group metals (PGM) commodity prices.
Safety and Health
- Group lost-time injury frequency rate (LTIFR) improved
to 0.24 per 200 000 man-hours (1H F2023: 0.28) and group
total recordable injury frequency rate improved to 0.48
(1H F2023: 0.62).
Operational
- Iron ore sales volumes were higher in 1H F2024 compared
to 1H F2023, as the comparative period was impacted by
industrial action at Transnet.
- Unit production costs remained under pressure due to
lower production volumes and above-inflation increases
in electricity and maintenance costs at the manganese
and PGM operations.
- The decline in the average US dollar 6E PGM basket price
and the lower thermal coal prices were partially offset
by a weaker average rand/US dollar exchange rate and
higher average realised export iron ore prices.
Environmental and Social
- Decarbonisation pathways identified several initiatives
to meet the long-term target of achieving net-zero
greenhouse gas (GHG) emissions (scope 1 and 2) from
mining by 2050. These initiatives include improving
energy efficiencies, implementing renewable energy, and
the use of new energy vehicles.
- Construction of the off-site solar power plant commenced
during the first half of F2024 which will provide
renewable energy to our ARM Platinum operations.
Growth
- ARM continues to be confident about the long-term
profitability of Bokoni. The definitive feasibility
study (DFS) for the phased development of Bokoni was
further advanced to a bankable feasibility study (BFS)
level. Due to depressed commodity prices and uncertain
immediate outlook, the BFS project approval request has
been deferred. The immediate priority will be to
conserve cash while ramping up production on a phased
basis, from the installed capacity of 60 000 tonnes per
month by leveraging and enhancing existing
infrastructure.
Safety and Health
We are committed to maintaining a safe and healthy work environment
for all employees and contractors. There were no fatalities during
the period under review compared to one fatality in 1H F2023.
The operations delivered improved safety performances, with a group
LTIFR of 0.24 per 200 000 man-hours in the period under review
compared to 0.28 per 200 000 man-hours in 1H F2023. The total
recordable injury frequency rate (TRIFR) improved to 0.50 from
0.62.
In November 2023, Modikwa Mine achieved two million fatality-free
shifts and Two Rivers Mine achieved one million fatality-free
shifts; the last fatalities were in June and November 2022,
respectively.
Financial performance
Headline earnings
Headline earnings for 1H F2024 decreased by 43% to R2 955 million
or R15.07 per share (1H F2023: R5 172 million or R26.39 per share
restated).
The average realised rand exchange rate weakened by 8% versus the
US dollar to R18.68/US$ compared to R17.33/US$ in 1H F2023. For
reporting purposes, the closing exchange rate was R18.33/US$ (31
December 2022: R16.93/US$).
ARM Ferrous headline earnings were 12% higher at R2 821 million
(1H F2023: R2 520 million) as a 67% increase in headline earnings
for the iron ore division was partially offset by a 95% decline in
headline earnings for the manganese division.
Key factors contributing to the higher headline earnings of the
iron ore division included:
- Higher average realised US dollar prices for iron ore, in
line with the increase in iron ore index prices
- A 6% increase in export iron ore sales volumes compared to 1H
F2023, coupled with a 23% increase in local iron ore sales
volumes
- The weaker rand/US dollar exchange rate.
Lower headline earnings in the manganese division were driven
primarily by lower average realised US dollar manganese ore and
alloy prices, partially offset by the weaker rand/US dollar
exchange rate and higher sales volumes.
ARM Platinum headline earnings were 121% lower at a R282 million
loss (1H F2023: R1 330 million earnings) due to depressed commodity
prices and above inflation unit cost increases.
Two Rivers Mine headline earnings were 82% lower at R164 million
(1H F2023: R920 million), mainly due to depressed commodity prices.
Modikwa Mine headline earnings were 105% lower at a R31 million
loss (1H F2023: R615 million earnings), mainly due to depressed
commodity prices.
Bokoni Mine reported a headline loss of R341 million (1H F2023:
R150 million loss), driven mainly by the mine ramping up to its
first PGM ounce production and 1H F2023 only being included for
four months. First PGM ounce production was successfully achieved
in November 2023.
Refer to page 13 of the full announcement for further information
on the mark-to-market adjustments in ARM Platinum.
Nkomati Mine reported a headline loss of R74 million (1H F2023:
R55 million loss), driven mainly by the increase in decommissioning
unwinding costs. The mine has been on care and maintenance since
15 March 2021. During 1H F2024, the period under review, ARM and
Norilsk Nickel Africa Proprietary Limited (NNAf) concluded a
Purchase and Sale Agreement which provides for the acquisition by
ARM of NNAf's 50% participation interest for a cash consideration
of R1 million. ARM will take over NNAf's proportionate share of
the obligations and liabilities relating to the Nkomati Mine's
assets.
ARM Coal headline earnings were 85% lower at R204 million (1H
F2023: R1 404 million) driven mainly by lower export thermal coal
prices.
ARM Corporate and other (including Gold) reported headline earnings
of R324 million (1H F2023: R71 million), driven mainly by an
increase in management fees received.
Machadodorp Works reported a headline loss of R112 million (1H
F2023: R153 million loss) related to research into developing
energy-efficient smelting technology.
Basic earnings and impairments
Basic earnings decreased by 72% to R1 216 million (1H F2023: R4
388 million restated) and included attributable impairments as
follows:
- An impairment of property, plant and equipment at Two Rivers
Mine of R1 070 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 R288 million after tax
- An impairment of property, plant and equipment at Cato Ridge
Works of R5 million after tax.
The impairments at our ARM Platinum operations were largely due to
a significant decrease in profitability resulting from lower PGM
commodity prices. The impairments at our ARM Ferrous operations
were largely due to lower projected sales volumes and lower
projected pricing.
Refer to note 4 of the interim financial statements for more
information on these impairments.
Financial position and cash flow
At 31 December 2023, ARM had net cash of R7 935 million (30 June
2023: R9 779 million), a decrease of R1 844 million compared to
the end of the 2023 financial year. This amount excludes
attributable cash and cash equivalents held at ARM Ferrous (50% of
Assmang) of R2 623 million (30 June 2023: R4 939 million). There
was no debt at ARM Ferrous in either of the reporting periods.
Refer to page 6 of the full announcement for a summary of dividends
received from operations.
Cash generated from operations decreased by R4 845 million to R449
million (1H F2023: R5 294 million), which includes an outflow in
working capital of R786 million (1H F2023: R641 million inflow),
mainly due to an outflow of trade payables.
In 1H F2024, ARM paid R2 353 million in dividends to its
shareholders, representing the final dividend of R12.00 per share
declared for F2023 (1H F2023: R3 921 million representing the F2022
final dividend of R20.00 per share).
Net cash outflow from investing activities was R3 036 million (1H
F2023: R5 052 million) which was mainly due to expansionary capital
expenditure at Two Rivers Mine and Bokoni Mine.
Borrowings of R49 million (1H F2023: R211 million) were repaid
during the period, resulting in gross debt of R193 million at 31
December 2023 (30 June 2023: R242 million).
The group net asset value per share increased by 2% to R224.18 per
share (30 June 2023: R219.05 per share restated).
Investing in growth and our existing business
The Bokoni early-ounce project, approved by the board in March
2023, was completed as planned in the second quarter of F2024,
producing saleable PGMs ounces. ARM continues to be confident about
the long-term profitability of Bokoni. The DFS for the phased
development of Bokoni was further advanced to a BFS level.
Due to depressed PGM commodity prices and uncertain outlook, the
BFS project approval request has been deferred. The immediate
priority will be to conserve cash while ramping up production on a
phased basis, from the installed capacity of 60 000 tonnes per
month by leveraging and enhancing existing infrastructure.
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 as well as 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 1H F2024, the board approved and declared an interim dividend
of 600 cents per share (gross) (1H F2023: 1 400 cents per share).
The amount to be paid is approximately R1 348 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 600 cents per ordinary share for
shareholders exempt from dividends tax
- The net local dividend is 480.00000 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, and
- ARM's income tax reference number is 9030/018/60/1.
A gross dividend of 600 cents per ordinary share, being the dividend
for the six months ended 31 December 2023, has been declared payable
on Monday, 8 April 2024 to those shareholders recorded in the books
of the Company at the close of business on Friday, 5 April 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 not
later than Friday, 5 April 2024. The last day to trade ordinary
shares cum dividend is Tuesday, 2 April 2024. Ordinary shares trade
ex-dividend from Wednesday, 3 April 2024.
No dematerialisation or rematerialisation of share certificates may
occur between Wednesday, 3 April 2024 and Friday, 5 April 2024 both
dates inclusive, nor may any transfers between registers take place
during this period.
Scope of independent auditor
The financial results for the six months ended 31 December 2023 have
not been reviewed nor audited by the Company's registered auditor,
KPMG Inc. (the partner in charge is S Loonat CA(SA)).
ENDS
For all investor relations queries please contact:
Thabang Thlaku
Executive: Investor relations and new business development
Office: +27 11 779 1300
Email: thabang.thlaku@arm.co.za
Johannesburg
8 March 2024
Sponsor: Investec Bank Limited
Date: 08-03-2024 07:05:00
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