MERAFE RESOURCES LIMITED - Trading Statement and Production Report

Release Date: 28/07/2014 08:00
Code(s): MRF
 
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Trading Statement and Production Report

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”)


Trading statement and production report for the period ended 30 June 2014


Trading statement

       Basic and headline earnings per share

       In terms of the JSE Limited Listings Requirements, issuers are required to publish a
       trading statement as soon as they are satisfied that a reasonable degree of certainty
       exists that the financial results for the period to be reported on will differ by at least
       20% from those of the prior comparative period.

       Shareholders are therefore advised that Merafe is expecting to report the following for
       the six months ended 30 June 2014:

       •   Basic earnings per share of between 8.7 cents and 9.3 cents, compared to 1.3 cents
           for the comparative period, which is an increase of between 569% and 615%;

       •   Headline earnings per share of between 8.6 cents and 9.2 cents compared to 3.8
           cents for the comparative period, which is an increase of between 126% and
           142%.

       The significant period on period increase in headline earnings was primarily
       attributable to the increase in ferrochrome production and sales volumes and the
       weakening of the Rand against the US Dollar.


       Update on cash balance and debt

       Merafe is expected to close at 30 June 2014 with a net cash balance of R19m
       (31 December 2013: net overdraft balance of R11m), total debt owing to ABSA
       Capital of R592m (31 December 2013: R581m) and R65m (31 December 2013:
       R194m) utilisation of the short term inventory facility.

Shareholders are advised that the financial information on which this trading statement is
based, has not been reviewed or reported on by Merafe’s external auditors and is provided in
terms of paragraph 3.4(b) of the JSE Limited Listings Requirements.

The financial results for the period ended 30 June 2014 are expected to be released on SENS
on 12 August 2014.
Production report

   1. Production and sales volumes

   Merafe’s operating capacity utilisation for the first half of 2014 was 90% which is
   equivalent to an increase of 16% period on period. This increase was primarily
   attributable to a stronger market and the impact of the Eskom buy-back agreements that
   were entered into in the first half of 2013 and were non-recurring in the first half of this
   year. Ferrochrome sales volumes increased by 25% period on period.


                                                      Six months          Six months
                                                        Ended               Ended
                                                     30 June 2014        30 June 2013
       Attributable ferrochrome production (kt)           168                 145
       Attributable ferrochrome sales (kt)                171                 137
       Average European benchmark
       ferrochrome price (USc/lb)
       (Metal Bulletin)                                  120                  120
       Average Rand/Dollar Exchange Rate                 10.7                 9.2




   2. Impact of strike action in the Platinum Industry

   The strike action in the platinum industry resulted in reduced UG2 production and higher
   chrome ore input costs at the Venture’s furnaces during the first half of 2014, as a
   consequence of a higher percentage of own mined ore and bought in ore, used in the
   production of ferrochrome, instead of internally produced UG2 concentrate.


   3. Safety

   Safety remains a key focus area and all efforts continue to be made to ensure that the
   highest standards of safety are in place at all the Venture’s operations.

   As previously reported, an accident occurred on 9 April 2014 at the Venture’s Kroondal
   mine in Rustenburg which sadly resulted in an employee being fatally injured.

   The Venture’s total recordable injury frequency rate (TRIFR) increased slightly to 4.41
   due to two additional injuries in the first half of this year, compared to the first half of
   2013.


   4. Update on Project Lion II

   As previously reported, ferrochrome production from the first furnace of our Project Lion
   II commenced on 6 April 2014. Ferrochrome production from the second furnace
   commenced on 30 May 2014.
During mid July 2014, daily ferrochrome production reached more than 60% of design
capacity and the plant is expected to reach full capacity within the next year.

The project has an excellent safety record with more than 9.6 million continuous man
hours worked, without a lost time injury.

28 July 2014
Sandton

Sponsor
Merrill Lynch South Africa Proprietary Limited

Kajal Bissessor
Chartered Accountant (SA)
Finance and Investor Relations Manager
Merafe Resources Limited
Ph: +2711 783 4780 / +27 83 784 6686

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