African Rainbow Minerals (ARM), the diversified miner founded and chaired by Patrice Motsepe, has earmarked R1bn in capital expenditure to revive the Bokoni Platinum Mine, the operations of which have been idling since 2017 when they were put under care and maintenance by the previous owners.
ARM bought Bokoni from the joint partnership between Anglo American Platinum and Atlatsa Resources Corporation last September in a R3.5bn cash transaction that ARM hopes will scale up its platinum group metals (PGM) portfolio.
The mine is located on land owned by the Baroka ba Nkwana, which spans more than 20,000ha in the Eastern Bushveld in Limpopo, a mining area containing big deposits of platinum, chromium and vanadium.
The capital expenditure will enable the mine to deliver early ounces, ARM said on Monday. These will enable the mine to capitalise on the current strong PGM basket prices and commence with early development of the underground infrastructure required for the new planned UG2 mine.
The definitive feasibility study for the new mine is progressing well and is focused predominantly on the UG2 resource, using mechanised mining methods, and targeting on-reef development, ARM added.
The capex plan for Bokoni followed the release of the group’s results for the six months to end-December.
ARM upped its interim dividend as its profit increased after higher revenue and gross profit despite weaker production. The company, valued at R59.1bn on the JSE, declared a 16.67% higher dividend of R14 per share in its half-year results to end-December.
ARM reported a 16% slump in production to 6.98-million tonnes, but was helped by volatility in global commodity prices pushing up prices, including coal and manganese. The instability was brought on by several factors, including the war in Ukraine weighing on the global economy, worry about a possible global recession, high inflation, rising interest rates, surging energy prices and supply chain disruptions from the Covid-19 pandemic.
“A number of these challenges are expected to persist in 2023 resulting in continuing volatility in global commodity prices,” ARM, which also has an interest in gold, iron ore and platinum group metals, said.
“Key factors that are expected to support several commodities in the short term include Chinese policymakers introducing measures to arrest a housing slump in November 2022, China relaxing its zero-Covid policy recently and early indications that global inflation is peaking,” it added.
Iron ore, manganese ore and thermal coal volumes were also hampered by logistical challenges, particularly on the local rail network run by Transnet. This has triggered a trend where more local mining companies have switched to transporting their product to ports by truck instead of train.
ARM weathered the effect of above-inflation increases in diesel, explosives, freight, among other things, in which production costs remained under pressure.
“These cost elements remain susceptible to prevailing market conditions. We continue to explore and implement various efficiency and cost-containment initiatives at our operations to mitigate against above-inflation unit cost increases,” ARM said.
In terms of financials, profit jumped 14.3%, with ARM Platinum and ARM Ferrous making the biggest contributions with 43.3% and 31.9%, respectively.
Revenue rose more than one-fifth to R9.37bn, gross profit 28.9% to R4.37bn and cash generated from operations advanced close to one-tenth to R5.29bn.
Headline earnings per share, the main profit measure in SA that excludes certain items, grew 40% R5.17bn.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.