The market is taking the long-view on African Minerals (AMI) as the Aim-traded miner forges ahead with the development of the Tonkolili iron ore mine in Sierra Leone. In fact, AMI's share price held steady post these results despite a downward revision to 2012's production guidance.
AMI made its maiden shipment of ore in November, and generated $9.6m (£6.04m) in revenues, which were credited to "assets under construction" within these full-year accounts. Production for this year and next is already committed to buyers, including China's Shandong Iron & Steel, which last month took up a 25 per cent stake in the Tonkolili project for $1.5bn (£943m), thereby funding the second phase of expansion. Commodity trader Glencore will also take 4.7m tonnes a year from 2013 under a five-year contract.
While AMI is on-track to hit its Phase I annualised production target of 20m tonnes of ore by the fourth quarter, 2012 output estimates were reduced by a third to 10m tonnes. A reduction had been widely anticipated, but the figure is at the low-end of analyst expectations because the ramp-up at Tonkolili is being constrained due to delays in the delivery of rolling stock. AMI will also have to contend with its first wet season, so a conservative estimate is probably prudent.
Jefferies has cut EPS estimates from 117¢ to 3¢ for 2012 and from 228¢ to 142¢ for next year.
| AFRICAN MINERALS (AMI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 554p | MARKET VALUE: | £1.8bn | |
| TOUCH: | 554-555p | 12-MONTH HIGH: | 673p | LOW: 339p |
| DIVIDEND YIELD: | NIL | PE RATIO: | NA | |
| NET ASSET VALUE: | 298¢ | NET DEBT: | 55% | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2007 | 7.49 | -40.7 | -30.1 | nil |
| 2008 | 2.21 | -23.6 | -14.3 | nil |
| 2009 | nil | -17.4 | -1.4 | nil |
| 2010 | nil | -46.5 | -14.0 | nil |
| 2011 | nil | -40.4 | -4.1 | nil |
| % change | - | - | - | - |
Aim: Mining £1=$1.59 | ||||
