African Rainbow Minerals increases its headline earnings by 40%

Headline earnings for 1H F2023 increased by 40% to R5 171 million (1H F2022: R3 696 million). Headline earnings for the previous period included re-measurement losses of R346 million mainly related to the ARM Coal loans owing to Glencore Operations South Africa. These loans have since been fully settled.

The average realised rand exchange change weakened by 15% versus the US dollar to R17.33/US$ compared to R15.02/US$ in 1H F2022. For reporting purposes, the closing exchange rate was R16.93/US$ (31 December 2021: R15.98/US$).

ARM Ferrous headline earnings were 4% higher at R2 520 million (1H F2022: R2 428 million) as a 54% increase in headline earnings for the manganese division was largely offset by a 12% decline in headline earnings for the iron ore division. Key factors contributing to lower headline earnings in the iron ore division included:

  • Lower average realised US dollar prices for iron ore, in line with the decline in iron ore index prices; and
  • A 15% decrease in export iron ore sales volumes, coupled with a 33% decline in local iron ore sales volumes.

These were partially offset by the weaker rand/US dollar exchange rate.

Higher average US dollar prices realised for export manganese ore, coupled with improved manganese ore sales volumes and a weaker rand/US dollar exchange rate contributed positively to the manganese division’s headline earnings.

ARM Platinum headline earnings were 7% higher at R1 330 million (1H F2022: R1 245 million). Two Rivers Mine delivered a 27% increase in headline earnings to R920 million (1H F2022: R725 million) while Modikwa Mine headline earnings increased by 4% to R615 million (1H F2022: R594 million) as both operations benefitted from the weaker rand/US dollar exchange rate and comparatively lower negative mark-to-market adjustments. These benefits were partly offset by above-inflation unit cost increases at both mines.

Bokoni Mine, which is included for the first time in the ARM interim results, reported a headline loss of R150 million for 1H F2023. The mine remains on care and maintenance while the definitive feasibility study progresses.

Nkomati Mine reported a headline loss of R55 million (1H F2022: R74 million) with the mine having been placed on care and maintenance on 15 March 2021. ARM continues to engage its joint venture partner on the various options available for the future of Nkomati Mine.

ARM Coal headline earnings were R1 053 million higher at R1 404 million (1H F2022: R351 million) driven mainly by increased export thermal coal prices. Thermal coal sales volumes were under pressure in the review period owing to inland logistics challenges.

ARM Corporate and other (including Gold) reported headline earnings of R70 million (1H F2022: R237 million loss). Included in ARM Corporate and other are re-measurement gains of R12 million (1H F2022: R364 million loss).

Machadodorp Works headline loss of R153 million (1H F2022: R91 million) related to research into developing energy-efficient smelting technology.

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