African Rainbow Minerals (ARM) is set to report a significant decline in earnings for the half-year ending December, impacted by falling prices in platinum group metals (PGMs) and thermal coal. The diversified miner anticipates a 40%-50% year-on-year decrease in interim headline earnings, which are expected to range between R2.586 billion and R3.103 billion. Headline earnings per share (Heps) are also projected to fall to R13.19-R15.83 from R26.39.
The average dollar PGM basket prices saw a 43% drop, alongside lower thermal coal prices. These factors were somewhat offset by a weaker average rand/dollar exchange rate and increased average export iron ore prices.
The current market scenario has put PGM prices under significant pressure, with about 25% of PGM mine production currently operating at negative cash margins, based on the spot basket price of approximately $1,250 per PGM ounce.
ARM has also acknowledged impairments on several of its assets, totaling R1.74 billion across different operations. This move reflects the revaluation of the company's assets due to market fluctuations and the impact of lower commodity prices on asset valuations.
Additionally, ARM has recently taken full ownership of the Nkomati nickel mine in Mpumalanga, which is set to close in 2024 pending regulatory approval. The mine is noted for its predictable nickel sulphide ore body, essential for producing nickel used in stainless steel and electric vehicle batteries. Nkomati is also recognized for its relatively low carbon emission footprint and the potential for quick resumption of class one compatible nickel sulphide concentrate production.
ARM shares saw a 2.16% drop to R168.14 at Wednesday's close, marking about a 35% decrease over the past year. The company is scheduled to release its interim results on March 8.
