The share price of the JSE-listed Merafe Resources rose 3% last week after the black-controlled company posted a 112% increase in headline earnings per share (HEPS) for the 12 months to December 31 and 32% higher ferrochrome production.

The share price rose to 104c a share on the back of HEPS lifting to 10.8c and ferrochrome production increasing to 319 000 t for the year.

Revenue rose 38% to R3.5-billion and cash of R487-million was generated, but the Merafe board stood back from declaring a 2013 dividend.

The business, headed by CEO Zanele Matlala, achieved the 2013 results by extracting chrome ore from the mines of the venture it has with Glencore and beneficiates the chrome ore in its smelters. The Glencore-Merafe Chrome Venture, a joint arrangement which constitutes joint control, has a total installed capacity of 1.98-million tons of ferrochrome a year.

The company, in which the Bafokeng community has a controlling stake, is investing in the Bokamoso and Tswelopele pelletising and sintering plants and the Lion II ferrochrome expansion, which uses the proprietary Premus technology to ensure low production cost.

Despite rising energy costs, Premus keeps the company in the lowest quartile of the global ferrochrome production cost curve.

The medium-term objective of Merafe, which shares in 20.5% of the venture’s earnings before interest, taxes, depreciation and amortisation (Ebitda), is to grow through diversification in addition to growing and improving its ferrochrome operations.

Merafe’s share of 2013 Ebitda from the venture was R583.5-million, which was 67% higher than the R349.4-million of 2012.

Merafe’s revenue from the venture increased by 38% from the prior year, primarily as a result of a 23% increase in ferrochrome sales, to 314 000 t, compared with 255 000 t in 2012, and a 17% weaker rand that was partially offset by a 4% decrease in the average European benchmark ferrochrome price to $1.16/lb, compared with $1.21/lb in 2012.

Chrome ore revenue as a percentage of total revenue increased from 13% in 2012 to 14% in 2013.

In spite of higher electricity tariff increases this year, production cost increases were contained below ferrochrome-sector inflation.

The energy use of a ton of ferrochrome, produced reduced by 7% to 13.49 Gj, compared with 14.50 Gj in 2012, and the carbon dioxide emissions per ton of ferrochrome produced reduced by 3% from 5.10 in 2012 to 4.95 in 2013.