Merafe Resources profits to fall
BUSINESS / 31 Jan '13, 12:33am
Johannesburg - Merafe Resources (MRF) says that for the year ended December 2012‚ it expects to report headline earnings per share of between 4.6 cents and 5.1 cents compared to 6.4 cents for the 2011 year.
The group also reported on Thursday that ferrochrome production during 2012 was 8% lower than the comparative period primarily as a result of weak demand and participation in Eskom’s power buy-back programme.
File picture: Reuters. Credit: REUTERS
It added that the compensation received from Eskom for the electricity not consumed was adequate to cover the costs and lost profits on the associated volumes. Operating capacity utilisation for the 2012 year reduced to 66% compared to 72% for the prior year.
Releasing a trading update‚ the company said it expects basic earnings per share of between 1.7 cents and 2.0 cents‚ compared to 4.7 cents for the 2011 year;
The company explained that the 2012 basic earnings are lower than the prior year primarily as a result of an impairment loss.
The impairment loss arose as a result of the Xstrata-Merafe Chrome Venture considering the sale of certain high cost mining assets as part of its on-going cost saving initiatives and due to having sufficient ore availability. The sale of these assets‚ if concluded‚ would not impact on Merafe’s participation interest in the venture and the proceeds from such sale would accrue to the venture partners in accordance with their participation interests.
Merafe closed with a cash balance of R83m and had long-term debt owing to ABSA Capital of R512 million at 31 December 2012.
The average European benchmark ferrochrome price for the first quarter of 2013 was settled at 112.5USc per pound - 2% higher than the 110USc per pound price in the fourth quarter of 2012.
Merafe’s results for the year ended December 2012 are expected to be released on March 5. - I-Net Bridge