Key message: High iron ore prices boosted results, but the Demaneng mine is now producing at full production. Acquisition opportunities are available, with the announcement post results of an offer for Unicorn Capital Partners – with the target asset the Nkomati Anthracite Mine.

  • Afrimat announced FY20 results, with HEPS up 48.5% to 347.7c off a 11.4% increase in revenue and 27.5% increase in operating profit. Volume increases contributed 33% to the increased revenue, with price increases contributing 14%.
  • Net cash from operations was R676.8m, resulting in the debt: equity ratio falling to 8.2% (from 23.8%). Net debt currently sits at R128m.
  • Bulk Commodities: the Demaneng mine contributed at full production for a full year for the first time. Iron prices were favourable on the back of a 21% increase in iron ore sales.
  • Industrial Minerals: new markets, increasing volumes, cost reductions and efficiency improvements helped to grow operating profit by 22.5% with a healthy increase in margins.
  • Construction Materials: the division stabilised in a weak market, with the KZN business restructured during the prior year. The western Cape is holding up, but the Gauteng market continues to be weak.
  • Management is investigating a number of near-term growth opportunities in bulk commodities and industrial minerals. Afrimat’s investment proposition is weighted towards the management team finding more Demaneng-type opportunities – small to medium deposits that can be purchased at a good price.
  • Afrimat announced an offer for Unicorn Capital Partners post the results announcement. The 60% held Nkomati Anthracite Mine is the target asset for this acquisition. It appears Afrimat has made another relatively cheap buy – R100m to buy UCP with another R100-150m of working capital required to get the mine fully operational (NAV of UCP R600m).

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