Reduced sales guidance and one-off charges put a damper on African Minerals' (AMI) maiden half-year results as a producer - although progress has been maintained towards a targeted annual production rate of 20m tonnes of iron ore.
Half-year cash profit reached $99m (£63m), but a compensation payment to its partner, Shandong Iron & Steel Group, along with other exceptional items, meant a $57.7m operating charge. A $39.7m impairment on investments held for sale was also booked and the group was hit with a combined finance and interest-related charge of $70.4m - although that was largely offset by a $103.8m fair value gain. Overall, the group reported a half-year net loss of $18.3m.
Cash costs in the half were $43 a tonne - but the $36 a tonne figure for June demonstrates that management's $30 a tonne target is achievable. However, the ability to reduce unit costs through expanding sales volumes has been compromised by maintenance issues - that meant a reduction in full-year export guidance from 13m-15m tonnes to 11m-13m tonnes. That reduction has placed additional pressure on the company's cash position and has already led to a more measured approach to phase II expansion at the group's Tonkolili mine in Sierra Leone.
Credit Suisse anticipates adjusted full-year pre-tax profit of $105.4m, giving adjusted EPS of 17¢ (from 10¢ in 2012).
| AFRICAN MINERALS LIMITED (AMI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 167p | MARKET VALUE: | £554m | |
| TOUCH: | 166p-167p | 12-MONTH HIGH: | 363p | LOW: 165p |
| DIVIDEND YIELD: | nil | PE RATIO: | 10 | |
| NET ASSET VALUE: | 271¢ | NET DEBT: | 48% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | nil | -86.1 | -26.2 | nil |
| 2013 | 405 | -24.6 | -9.34 | nil |
| % change | - | - | - | - |
£1=$1.58 | ||||
