Ferrochrome producer Merafe Resources expects to report robust earnings for the full year to the end of December 2023 on the back of a weaker rand/dollar exchange rate, an increase in prices for chrome ore and an increase in sales volumes.
In October, Merafe reported a 21% fall in ferrochrome output for the nine-month period ended September 30, 2023. It cited a pullback in in production due to market conditions during the quarter to end-September, which had elevated power prices.
Nonetheless, Merafe said yesterday that headline earnings per share (Heps) for the full year to December were expected to improve by between 4% and 24% to between 58.7 cents and 69.9c. The company expects to lift basic earnings per share (Eps) for the period to amount to between 64.5c and 75.7c, representing a jump of between 14% and 34%.
“The expected increase in Eps and Heps is primarily driven by a weaker ZAR:US$ exchange rate, high chrome ore sales volumes and higher realised prices due to market dynamics,” Merafe said in a trading update yesterday.
The company closed the period under review with cash and cash equivalents comprised of R697 million in cash and R959m in its share of the cash balance in the Glencore-Merafe Chrome Venture (JV).
“Included in the cash held by the Venture is cash set aside to fund future environmental rehabilitation obligations, with Merafe’s share of this cash being R328m,” explained Merafe Resources.
Merafe and Glencore SA reached an agreement to further contribute to the JV platinum group metals (PGM) production plant located at the Thorncliffe Mine, which would be improved and expanded.
The Glencore Merafe Chrome Venture PGM production plant, constructed at the Kroondal Mine, had been successful and profitable, and the parties intend to replicate this strategy on the JV’s eastern chrome mine operations, the company said last year.
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