ARM to spend R10bn to 2014, FY earnings surge

[LesCrozes]

ARM to spend R10bn to 2014, FY earnings surge
By: Loni Prinsloo
31st August 2011

JOHANNESBURG (miningweekly.com) − Diversified miner African Rainbow Minerals (ARM) saw a surge in earnings during its 2011 financial year and said that it intended to spend R10-billion up to 2014 to ensure further growth.

The miner, which has an interest in iron-ore, platinum, coal, chrome, manganese and nickel, reported a 94% increase in headline earnings to R3.32-billion, or 1 559c a share, compared with headline earnings of R1.71-billion, or 807c a share, the previous year.

Cash generated from its operation increased to R5.9-billion from R3.9-billion the previous year and the company reported a robust balance sheet of R2.59-billion, excluding its partner loans.

Chairperson Patrice Motsepe said that the company would continue with an aggressive growth strategy, which would largely be funded through its operational cash flow and existing funding sources.

Over the past three years, ARM had spent R9.5-billion on capital expenditure and Motsepe said that the company was confident about the long-term future of the minerals that the group mines.

During its 2011 financial year, ARM completed its Khumani iron-ore expansion project, its Nkomati nickel mine expansion and ramped up the Goedgevonden coal mine to full production.

It said that the Konkola North copper project in Zambia was progressing on budget and on schedule to produce first copper in December 2012.

“ARM has made structural changes to its exploration division to sharpen the company’s focus on identifying and assessing quality business opportunities in sub-Saharan Africa,” the company noted in a statement.

Its copper exploration assets under ARM Exploration, including a 30% shareholding in the Kalumines copper project and a 50% shareholding in the Lusaka and Kabwe project, would be moved into the ARM copper division.

The group would also explore for manganese, platinum-group metals, nickel and base metals in Mozambique to the cost of $7-million a year as per an agreement with Mozambican exploration company Rovuma Resources.

An experienced exploration team had been established that would be guided by Jan Steenkamp.

Starting September 1, Michael Schmidt would take over from Andre Wilkens as ARM CEO.

[yls11]

The Vale/ARM JV ("the JV") completed the bankable feasibility study for the
Konkola North Copper Project in June 2010 and approved the release of the
Konkola North Copper Project in August 2010. The project was subsequently
opened by his excellency, the President of the Republic of Zambia, Rupai B.
Banda, at a ground-breaking ceremony held on 14 October 2010.
The project capital expenditure in July 2010 terms is US$391 million. The
slight increase was attributable to increased safety measures deployed at
the mine. 82% of the total project value has already been contracted and
project progress is in accordance with the feasibility study with
commissioning of the concentrator plant expected in December 2012.
The mine`s throughput design is 2.5 mtpa of ore at an average mill head
grade of 2.3% copper, yielding 45 000 tonnes of contained copper in
concentrate to be toll smelted in Zambia. The expected life of mine will be
28 years. A further two year exploration programme to evaluate Area "A"
which has potential to double the output to 100 000 tonnes copper per annum
in concentrate is in progress. Initially the South and East Limb Mines will
be developed, after which the deeper, higher grade and wider reef areas
will be mined.
The Konnoco (ZAMBIA) Limited mining licence, LML20, has recently been
granted an extension to incorporate the Prospecting Licence of Area "A".
The revised licence, Licence 7061-HQ-LML, was issued in July 2011 and
covers an area of 240 km2. The mining licence is bound by the Zambia/DRC
border to the west, north and east and the KCM Konkola mining licence is
adjacent to the south.
ZCCM-Investment Holding PLC (ZCCM) notified the JV of its intention to
exercise their buy-in right into the project company of 20% with 5% thereof
being a free carry. In addition, ZCCM also elected to have their portion of
the non-free carry equity and project funding provided through their own
sourced financing.The JV will continue with the extensive drilling programme in Area "A"
situated about 5 km south of the planned mine development on the Konkola
North property. Drilling in the recent past has defined a substantial
copper resource in Area "A", and the planned drilling will further enhance
this resource base.