Key message: Iron ore prices have recovered, and Nkomati mine is profitable. Acquisitions continue with the Glenover surface dump purchase.

  • Afrimat continues to operate well and add new operations to its growing portfolio.
  • Iron Ore: Low prices and lump premiums together with high shipping rates did impact the iron ore division for most of 3Q, but this turned around in December and 4Q revenues have recovered well. Sales to AMSA are progressing steadily towards the ultimate 1.25mtpa, with approx. 650kt to be sold in FY22.
  • Anthracite: The Nkomati mine has continued its good turnaround and management continue to believe that the positive contribution in 2H should result in a breakeven for the full year. The high rainfall has not impacted production significantly. Anthracite prices are set annually in ZAR and are not linked to international prices.
  • Manganese: Further drilling is being done on the deposit to confirm possible extra reserves, and this may delay the schedule as the mine plan may need to be adjusted. The Section 11 mining rights and WULA applications are expected to be finalised by March 2022.
  • Industrial Minerals: growth on last year is expected.
  • Construction Materials: This has been disappointing as demand has been weak (down on prior year.) Civil construction remains low, and the W Cape has seen minimal new projects.
  • Glenover acquisition: Afrimat has purchased the surface phosphate stockpiles of the Glenover mine for R200m. The high-grade stockpile (approx. 15 yrs of sales) is being sold already, with beneficiation required to process the medium- and low-grade stockpiles (which contain rare-earth minerals as well). With the purchase of the mine itself vermiculite will be mined (from end CY22).
  • Gearing is expected to peak at R600-700m including the Glenover purchase. Approx. R750m capital outlay will be required for the Gravenhage/Glenover acquisition and development.
  • We increase our Sum-of-the-Parts valuation to R110 (from R88) as the iron ore volumes come through, pricing remains firm, and Nkomati is well on its way to a good recovery.

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