• Headline Earnings: Decreased by 49% to ZAR1.5 billion for the first half of 2025.
• Net Cash Position: ZAR6.1 billion as of December 2024.
• Dividend Declared: ZAR4.5 per share.
• ARM Ferrous Headline Earnings: Decreased by 33% to ZAR1.9 billion.
• ARM Platinum Headline Earnings: Decreased by 144% to ZAR689 million.
• ARM Coal Headline Earnings: Decreased by 11% to ZAR182 million.
• Dividends Received from Assmang: ZAR2.5 billion.
• Dividends Received from Harmony: Approximately ZAR170 million.
• Segmental EBITDA Contribution: Manganese increased, iron ore decreased.
• Lost Time Injury Frequency Rate: Improved by 33%.
• Total Recordable Injury Frequency Rate: Increased by 4%.
• Capital Expenditure: ZAR1.3 billion, primarily for sustaining capital.
• Total Borrowings: Increased by ZAR1 billion to ZAR2.1 billion.
• CapEx Guidance for 2025: Decreased to ZAR4.1 billion from ZAR4.7 billion.

• Warning! GuruFocus has detected 10 Warning Signs with AFBOF.

Release Date: March 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• African Rainbow Minerals Ltd (AFBOF) maintains a robust financial position with a net cash of ZAR6.1 billion as of December 2024.
• The company declared a dividend of ZAR4.5 per share, emphasizing its commitment to returning capital to shareholders.
• Manganese operations showed a strong performance with a 13% improvement in production, addressing previous operational challenges.
• The company is actively investing in future growth opportunities, including the Berg Copper Project in Canada.
• African Rainbow Minerals Ltd (AFBOF) is committed to safety and health, with a 33% improvement in the lost time injury frequency rate.

Negative Points

• Headline earnings for the first half of 2025 decreased by 49% to ZAR1.5 billion, indicating financial challenges.
• ARM Ferrous and ARM Platinum divisions experienced significant declines in headline earnings, with ARM Platinum decreasing by 144%.
• The company faces operational challenges, including lower commodity prices, logistics issues, and above-inflation cost increases.
• There is uncertainty regarding the future of the Beeshoek mine due to reduced offtake from ArcelorMittal, impacting production plans.
• The company is experiencing a cyclical downturn in the mining industry, affecting profitability and necessitating cost containment measures.

Q & A Highlights

Q: Given the current gold cycle, is an 18% payout ratio suitable for Harmony, and what are the plans for underperforming assets? A: Patrice Motsepe, Executive Chairman, suggested that specific questions about Harmony should be directed to Harmony's management. Regarding underperforming assets, CEO Velile Phillip Tobias mentioned a review process is underway, with actions such as labor rationalization at Modikwa and strategic decisions at Bokoni to reduce costs and improve efficiency.

Q: What are the options for Beeshoek if ArcelorMittal pulls the plug on the contract? A: Andre Joubert, CEO of ARM Ferrous, explained that Beeshoek is landlocked and relies solely on ArcelorMittal as a customer. The mine is currently reviewing various options due to the significant impact of reduced offtake from ArcelorMittal.

Q: What is the outlook for ARM's iron ore business, especially in terms of unit costs and export sales volumes? A: Andre Joubert noted that the forecast for iron ore volumes has been adjusted due to planned shutdowns for maintenance on the Transnet line. The unit cost increase is attributed to higher stripping ratios and maintenance costs, particularly at Beeshoek.

Q: Has ARM abandoned the narrow reef boring technology at Bokoni? A: Michael Schmidt, Executive for Growth and Strategic Development, confirmed that ARM is advancing with narrow reef boring technology. Trials are ongoing, and the technology is expected to improve safety, cost-effectiveness, and profitability.

Q: What is ARM's strategy regarding the rest of Africa and potential secondary listings? A: CEO Velile Phillip Tobias stated that ARM's strategy focuses on delivering competitive returns and creating sustainable value. Tsundzukani Mhlanga, Finance Director, mentioned that ARM is open to considering a secondary listing to raise its corporate profile and access foreign markets.

Q: What is ARM's view on the rhodium market and the manganese grading issue at Black Rock? A: Thando Mkatshana, CEO of ARM Platinum and ARM Coal, noted that rhodium prices have been flat, with recent increases possibly due to shifts in demand. Andre Joubert confirmed that the manganese grading issue at Black Rock has been addressed, with improved mining discipline and quality.

Q: What are the maintenance costs at Bokoni, and when is the PGM market expected to turn? A: Velile Phillip Tobias indicated that Bokoni's care and maintenance costs range between ZAR30 million and ZAR34 million per month. The timing of a PGM market turnaround remains uncertain, but ARM is focusing on responsible investment and cost management.

Q: What is the timeline for Surge Copper, and when will ARM start spending CapEx on this asset? A: Michael Schmidt explained that the pre-feasibility study for Surge Copper is expected within two years, with further development contingent on study outcomes. Significant CapEx spending is not anticipated in the immediate future.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.