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Merafe flags higher interim earnings ahead

Ferrochrome producer Merafe Resources' share price surged by 5 percent in morning trade yesterday following its announcement to its shareholders that it expects robust earnings. Photo Supplied

Ferrochrome producer Merafe Resources' share price surged by 5 percent in morning trade yesterday following its announcement to its shareholders that it expects robust earnings. Photo Supplied

Published Jul 28, 2022

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Ferrochrome producer Merafe Resources’ share price surged by 5 percent in morning trade yesterday following its announcement to its shareholders that it expects robust earnings.

In its production report and trading statement for the six months ended June 30, 2022, the JSE-listed group said it expects to report basic earnings per share (eps) of between 34.7 cents and 39.3c for the six months ended June 30, a 51 percent to 71 percent improvement on the basic eps of 23c reported.

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Headline earnings per share (heps) of between 34.7c and 39.3c, compared to 23.2c for the prior comparative period was likely, which was a hike of between 49.5 percent and 69.5 percent.

“The expected increase in eps and heps is primarily driven by higher chrome ore and ferrochrome prices and a weaker average rand:dollar exchange rate,” the group said.

Merafe said its attributable ferrochrome production from the Glencore Merafe Chrome Venture, its primary source of income, increased marginally by 1.7 percent for the period under review compared to the prior comparative period.

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Its chrome production amounted to 203 000 tonnes compared with 199 000 tonnes in the prior comparable period.

“The improvements in plant efficiencies achieved at our smelters continue to be sustained,” it said.

The group said it was debt-free and its net cash balance was R1.01 billion.

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Merafe will release its financial results for the interim period on or about August 23.

In January, the mining company announced that it and Glencore Operations South Africa Proprietary had reached an agreement to contribute to the joint venture of a new platinum group metal (PGM) production plant that is being constructed at the Kroondal Mine.

At the time, it said the new PGM plant’s main operations would be the treatment of PGM-bearing material derived from the mining operations at the joint venture’s western chrome mines available in applicable tailings facilities and dams; and from certain mining operations in the vicinity of the Kroondal Mine to which Glencore SA and/or Merafe directly or indirectly have rights concerning PGMs.

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PGM miners play a critical role in the automotive sector. Last year, PGM prices surged, boosting the sector. Chrome ore prices also lifted the basket price of PGMs in the past two years.

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