Diversified miner African Rainbow Minerals (ARM, ARI) on Monday reported diluted headline earnings per share of 906 cents per share for the six months ended December 2011 from 727 cents a year ago.

Headline earnings increased 24% to R1.94 billion while cash generated from operations increased by 25% to R2.56 billion.

The improvement in earnings was driven mainly by increased sales volumes in iron ore as the Khumani Iron Ore Expansion Project progressed well ahead of schedule, the company said. Higher sales volumes were also achieved in manganese ore, manganese alloys, PGMs, nickel and Eskom thermal coal.

The positive effect of improved sales volumes was, however, reduced by a decline in US Dollar commodity prices as uncertainty in global markets continued to put pressure on demand for commodities and thus commodity prices.

A 7.2% weakening in the rand against the US dollar did, however, offset some of the US dollar price decreases.

The company noted there had been a 68% increase in iron ore sales to 6.8 million tonnes, a 21% rise in nickel sales 5.2 thousand tonnes, a 20% increase in manganese alloy sales to 104 thousand tonnes, a 9% increase in manganese ore sales to 1.6 million tonnes and a 6% increase in PGM (including Nkomati) sales to 384,000 ounces.

The group said its growth projects continue to progress. The Khumani Iron Ore Expansion Project has been handed over to the mine and is currently ramping up production well ahead of schedule.

The Nkomati Nickel Large-Scale Expansion Project is ramping up in accordance with the revised plan and showed notable improvements in plant recoveries and production during the second quarter.

The Goedgevonden Coal Mine reached design capacity and the the Konkola North Copper Project continues to advance on schedule and within budget. Commissioning of the concentrator plant is expected in December 2012.

Looking ahead, the company said uncertainty in global markets persists driven by European sovereign debt issues, the delayed US recovery and concerns about a slowdown in China after the introduction of tightening measures in 2011.

During the period under review this manifested in volatile commodity and financial markets. These volatile trading conditions are expected to continue.

“Such market volatility makes planning difficult and also heightens the importance of controlling costs. Above inflation increases particularly in labour, electricity and diesel continue to be a challenge for the mining industry. It is nevertheless ARM's view that commodity prices will remain robust over the medium to long term and as a result ARM continues to invest in expansion capital at its existing operations and to fund exploration.”

ARM remains focused on aggressive growth and is ramping-up production of iron ore to 16 million tonnes per annum at the Khumani Mine, while nickel production at Nkomati is being increased to 20,500 tonnes per annum. The Goedgevonden Mine is ramped up to design capacity of 7.0 million tonnes per annum and the copper output at the Konkola North Copper Project is forecast to be 45,000 tonnes per annum at full production. - I-Net Bridge