African Minerals' shares - which had already hit a 12-month low last month - slipped 7 per cent on the back of these figures after the Sierra Leone iron ore miner revealed a fivefold rise in its half-year operating loss to $140.5m (£87.6m). But that severe de-rating could present a buying opportunity if, as management expects, the group meets its phase I annualised production run-rate of 20m tonnes during the second quarter of 2013.
The loss significantly reflected $86.9m of transaction costs associated with the group's strategic partnership with China's Shandong Iron & Steel Group. Shandong has invested $1.5bn in return for a 25 per cent stake in the company's Tonkolili project - thereby providing essential funding for the second phase of expansion. Moreover, and despite delays at Tonkolili - management downgraded year-end production guidance there for the second time in four months last month - the project is now back on track, with the bulk of the capital expenditure completed for the key infrastructure developments.
Meanwhile, new chief executive Keith Calder, a former Rio Tinto mining engineer, is confident that the phase I cash costs will come in at under $30 a tonne - low by industry standards.
| AFRICAN MINERALS (AMI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 278p | MARKET VALUE: | £921m | |
| TOUCH: | 277-278p | 12-MONTH HIGH: | 600p | LOW: 236p |
| DIVIDEND YIELD: | nil | PE RATIO: | na | |
| NET ASSET VALUE: | 242¢ | NET CASH: | $672m | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2011 | nil | -26.3 | -5.32 | nil |
| 2012 | nil | -86.0 | -26.2 | nil |
| % change | - | - | - | - |
£1=$1.58 | ||||
