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Report for the third quarter of 2013
Merafe Resources Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1987/003452/06)
JSE share code: MRF
ISIN: ZAE000060000
(“Merafe” or “the Company”)
Report for the third quarter of 2013
1. Key production and sales indicators
Merafe’s attributable ferrochrome production from the Glencore-Merafe Chrome Venture
(“the Venture”) was 71% higher in the third quarter of 2013 compared to the 2012
comparative period. This was due to additional planned production, excellent performance of
Lion I and the impact of major production improvements at the Venture’s Rustenburg plant
as a result of the stable operation of the Tswelopele pelletising and sintering plant. Operating
capacity utilisation of the Venture’s ferrochrome production facilities for the third quarter of
2013 was 94%, a significant increase from 55% for the 2012 comparative period.
The European benchmark ferrochrome price for the third quarter of 2013 was 112.5USc per
pound which was 10% lower than the 125USc per pound in the third quarter of 2012. The
average Rand Dollar exchange rate was 21% weaker in the third quarter of 2013 compared to
the 2012 comparative period. Ferrochrome sales tonnes were 25% higher in the third quarter
of 2013 compared to the 2012 comparative period.
Q3 Q3 Nine months Nine months
2013 2012 to 30/09/2013 to 30/09/2012
Attributable ferrochrome
production (kt) 85.6 50.2 230.4 168.7
Attributable ferrochrome
sales (kt) 73.1 58.7 210.3 182.6
Indicative average published
ferrochrome price (USc/lb)
(Metal Bulletin) 112.5 125.0 117.3 125.0
Average Rand / Dollar Exchange
Rate 9.99 8.26 9.47 8.05
2. Employee relations
Wage negotiations relating to all the smelters were completed and implemented, whereas
wage negotiations relating to the western mines are ongoing. The Venture continues to build
good relationships with its employees and unions and have implemented significant measures
to ensure stable industrial relations.
Mining operations at the Venture’s eastern mining operations have now returned to normal
levels following the unprotected strike which resulted in dismissals earlier this year.
3. Safety
The Venture’s total recordable injury frequency rate (TRIFR) improved from 4.25 for the
first nine months of 2012 to 3.95 for the first nine months of 2013. The Lion II project
contributed to this improvement with more than 4.7 million man hours worked, without any
lost time injury.
4. Cost saving initiatives
The benefits of ongoing cost saving initiatives within the Venture which include the placing
of the Horizon mine on care and maintenance are already evident. Overall, Merafe and the
Venture will also benefit from synergies that are expected to result from the Glencore Xstrata
merger.
5. Developments
Our Lion II project is still on track for the start of hot commissioning at the end of this year.
The overall project remains within schedule and budget and is estimated to be 76% complete
as at 30 September 2013. As we move into the exciting commissioning phase, we are
confident about project Lion II’s ability to deliver further efficiencies and cost savings
thereby enhancing the Venture’s competitive advantage.
24 October 2013
Sandton
Sponsor:
Merrill Lynch South Africa Proprietary Limited
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