Following the change of year-end from 30 June to 28 February, to provide a more meaningful assessment of the Bauba Resources’ performance for the period, pro forma financial information has been included for the comparable eight-month period to 31 October 2021 (comparable eight-month prior period).
Run-of-mine (RoM) production was 205 940 tonnes for the eight months to 28 February 2022 compared to 177 508 tonnes for the comparable eight-month prior period, an increase of 16,0%. RoM production for the prior financial period (12 months to 30 June 2021) was 294 480 tonnes. This period’s chrome concentrate production was 138 053 tonnes compared to 98 590 tonnes in the comparable eight-month prior period, an increase of 40,0%. Chrome concentrate production for the prior reporting financial period (12 months to 30 June 2021) was 182 390 tonnes. The improvement in the chrome concentrate production yield from 55,5% to 67,0% was driven by 23,4% higher stoping production while on-reef development production was flat.
Production was negatively impacted by adverse geological conditions necessitating a revision of underground support standards and a reduction in stoping panel length, requiring significant redevelopment as well as prolonged safety stoppages effectively impacting production by a combined month over the period October 2021 to December 2021.
Chrome ore cost, insurance and freight (CIF) prices for benchmark 42% concentrate, as reported by FerroAlloyNet, averaged US$172 per tonne (China CIF) for July 2021 to February 2022. July 2020 to June 2021 prices averaged US$148 per tonne (China CIF). The US$24 per tonne increase in the average chrome ore China CIF prices for benchmark 42% concentrate was offset by a similar increase in freight costs and an average stronger South African Rand.
Freight costs during the current reporting period have increased significantly (in US Dollar terms) compared to the prior reporting financial period. The increase in freight pricing to record levels has been caused by global demand exceeding available capacity and new capacity not becoming available quickly enough. In South Africa, factors negatively impacting freight costs are the COVID-19 pandemic, key port terminal assets requiring regular maintenance, the recent civil unrest, the port cyber attack and poor port operations.
Turnover increased by 1,9% to R256,2 million from R251,3 million for the comparable eight-month period. Turnover for the 12 months to 30 June 2021 was R277,1 million. This was partially offset by an increase in chrome concentrate production and an increase in chrome speciality-grade concentrate sales over the comparable eight-month prior period.
Cost of sales decreased by 4,05% driven by the current reporting period of eight months compared to the prior reporting financial period partially offset by increased RoM production of 16,0%, the increase in diesel costs, prolonged safety stoppages and adverse geological conditions resulting in the mine running below capacity and incurring substantial fixed costs without associated production. The cost per tonne of concentrate produced increased by 26,8%.
ACQUISITION OF KOOKFONTEIN (NUCO CHROME)
The Kookfontein chrome project is situated in the North West province of the Republic of South Africa. Bauba purchased a 74% shareholding in Nuco Chrome Bophuthatswana Proprietary Limited (Nuco Chrome), as detailed in the SENS announcements published on 23 July 2019 and 5 July 2021. 22% was acquired in July 2019 with the remaining 52% being acquired subsequent to the year ended 30 June 2021 (in July 2021).
Nuco Chrome is an exploration and mining company with mineral rights for various minerals, including chrome ore and platinum group elements. The first phase of opencast mining will target approximately 400 000 tonnes of opencast fresh and transitional UG2 ore.