Trading Statement and Production Report
Merafe Resources Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1987/003452/06)
JSE share code: MRF
(“Merafe” or “the Company”)
Trading statement and production report for the period ended 30 June 2014
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
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.
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
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.
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
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
Merrill Lynch South Africa Proprietary Limited
Chartered Accountant (SA)
Finance and Investor Relations Manager
Merafe Resources Limited
Ph: +2711 783 4780 / +27 83 784 6686
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