African Rainbow Minerals earnings decrease due to low PGM price

In its Condensed Reviewed Results for the Financial Year Ended 30 June 2024, African Rainbow Minerals has released the following salient features of the period:

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.

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).

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.