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AFRICAN RAINBOW MINERALS LIMITED - Trading statement in respect of the financial year ended 30 June 2017

Release Date: 21/08/2017 16:30
Code(s): ARI     PDF:  
Wrap Text
Trading statement in respect of the financial year ended 30 June 2017

African Rainbow Minerals Limited
(Incorporated in the Republic of South Africa)
(Registration number 1933/004580/06)
JSE Share code: ARI
ISIN: ZAE000054045
(“ARM” or the “Company”)


Trading statement in respect of the financial year ended 30
June 2017


In terms of paragraph 3.4(b) of the Listings Requirements of the
JSE Limited, a listed company is required to publish a trading
statement as soon as it is satisfied that a reasonable degree of
certainty exists that the financial results for the period to be
reported on next will differ by at least 20% from those of the
previous corresponding period.




ARM’s headline earnings for the financial year ended 30 June 2017
(F2017) have been positively affected by an increase in the average
US Dollar commodity prices realised for all of the commodities
which ARM produces, which was partly offset by the negative impact
of   a   stronger        average    Rand/US   Dollar    exchange    rate.   Cost
containment initiatives throughout the year have yielded positive
results,    with    most    operations    achieving     unit   production   cost
increases that are either at or lower than inflation.




A provision has been raised for a possible settlement of the
silicosis and tuberculosis class action claims and related costs
of R330 million (see further details below).




Headline earnings per share for F2017 are expected to increase by
between 229%       and    245%     compared to   the   previous    corresponding
financial year (F2016) to between 1 625 and 1 702 cents (F2016:


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494 cents) based on a weighted average number of shares of 189 768
000 (F2016: 212 990 000).




ARM’s F2017 basic earnings are expected to be impacted mainly by:

        attributable impairment previously reported in the interim
      results for the six months ended 31 December 2016 (1H F2017)
      of the Nkomati Mine assets of R711 million after tax;

         attributable impairment previously reported in 1H F2017
      of the Modikwa Mine assets of R734 million after tax and
      non-controlling interest; and

      an attributable partial impairment reversal of the Lubambe
      Mine assets of R144 million after non-controlling interest
      following the classification of Lubambe Mine as an operation
      held for sale.




Basic earnings per share are therefore expected to increase to a
basic earnings per share of between 695 and 745 cents (F2016: 265
cents loss).




Lubambe Copper Mine

Lubambe Mine will be classified as held for sale at 30 June 2017
and will be disclosed as a discontinuing operation in terms of
International Financial Reporting Standards.




Silicosis and tuberculosis class action provision

In November 2014, a gold mining industry working group was formed
to address issues relating to the compensation and medical care
for occupational lung diseases in the gold mining industry in South
Africa. The    working group   comprises ARM,   Harmony   Gold   Mining
Company Limited, Anglo American South Africa Limited, AngloGold

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Ashanti Limited, Gold Fields Limited and Sibanye Gold Limited
(collectively “the Working Group”).




The   Working   Group      engaged   different   stakeholders     including
government, organised labour, other mining companies and legal
representatives of claimants who have filed legal suits against
the   companies.   These    engagements   have   sought   a   comprehensive
solution to address legacy compensation issues and future legal
frameworks that are fair to past and current employees and enable
companies to continue to be sustainable over the long-term.




As a consequence of the progress of negotiations between the
Working Group and affected stakeholders, the Company is now in a
position to reliably estimate, within an acceptable range, the
Company’s share of a possible settlement of the class action claims
and related costs. As a result, ARM has recorded a provision of
R330 million (discounted) in the results for the year ended 30 June
2017. The nominal amount of the provision is R417 million.




The companies do not believe that they are liable in respect of
the claims brought, and are defending these. The Working Group is
appealing the ruling, which matter has been set for hearing from
19 to 23 March 2018.       They do, however, believe that they should
work together to seek a solution to this South African mining
industry legacy issue. The negotiations with the claimants’ lawyers
are confidential and the Working Group companies are accordingly
not able to provide any details of the negotiations.




The financial information on which this trading statement is based
has neither been reviewed nor reported on by the external auditors
of ARM.




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The Company’s F2017 provisional financial results will be released
on 7 September 2017.

ENDS


For all investor relations queries please contact:

Jongisa Magagula
Corporate Development and Head of Investor Relations
Tel:      +27 11 779 1507
E-mail:   jongisa.magagula@arm.co.za

Johannesburg
21 August 2017


Sponsor: Deutsche Securities (SA) Proprietary Limited




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