Mining

Merafe warns of lower share earnings as ferrochrome, chrome ore prices decline

MERAFE Resources will report a headline loss per share for its 2019 annual results for the year ended December 31 owing to an impairment brought about by its share price weakness. Chrome ore and ferrochrome prices had been lower in the year, it added.

Commenting in a trading statement today, the company said headline earnings would come in between 2.3 and 2.9 cents per share compared to share earnings and headline share earnings of 27.2 cents/share for the previous financial year.

Lower metal prices were partially offset by a stronger average rand compared to US dollar exchange rate, the company said.

“The expected significant decrease in earnings per share is primarily due to the impairment of property, plant and equipment. The trigger for the impairment assessment was Merafe’s share price which was trading at a discount to its net asset value,” it said.

The impairment loss is a result of the calculated recoverable amount being lower than the net carrying amount of the business.

Cash and cash equivalents would increase to R354m as of December 31 compared to R281m at the close of the previous year as a result of a decline in working capital requirements, it said.

The group, which has a 20.5% share in the Glencore-Merafe Chrome Venture, said in October that community unrest as one of the reasons behind the decline in third quarter production.

Commenting briefly in a production update today to the Johannesburg Stock Exchange, the company said output had fallen 29% compared to the third quarter last year. “This decrease was as a result of increased planned maintenance, increased community unrest as well as production cutbacks in response to market conditions during the third quarter ended 30 September 2019,” the company said.

The post Merafe warns of lower share earnings as ferrochrome, chrome ore prices decline appeared first on Miningmx.

Source: miningmx.com

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