Shares in iron ore miner African Minerals (AMI) surged on better-than-expected production forecasts - news which easily overshadowed the group's operational performance in 2012. African Minerals is ramping-up towards an initial production target of 20m tonnes per annum (tpa) for the second half of this year.
The group has been frustrated by various weather-related production delays at its flagship Tonkolili mine in Sierra Leone, but management now expects to export between 13m and 15m tonnes of ore this year. More importantly, with a new wet processing plant up and running, the group is on-track to hit its initial target at Tonkolili and is already working towards the next stage of expansion - to 35mtpa. Construction should start at end-2013. Cash costs are also expected to fall by about a third to $30 (£19.60) per tonne by the year-end, although some analysts believe costs could be lower given the scale of the ramp-up.
The headline profit reflects proceeds from Shandong Iron & Steel Group's acquisition of a 25 per cent stake in the Tonkolili project. The group remains loss-making at the operating level - although the adjusted operating loss fell to $27.9m from 2011's $35.6m loss. African Minerals raised funds with a $400m convertible bond issue, too, and management expects to the group to be sustainably cash-flow positive during the current quarter.
| AFRICAN MINERALS (AMI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 250p | MARKET VALUE: | £828m | |
| TOUCH: | 249-250p | 12-MONTH HIGH: | 584p | LOW: 207p |
| DIVIDEND YIELD: | nil | PE RATIO: | 35 | |
| NET ASSET VALUE: | 276¢ | NET CASH: | $20,721 | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 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 | -4.06 | nil |
| 2012 | nil | 4.32 | 10.9 | nil |
| % change | - | - | - | - |
| £1=$1.53 | ||||
