JOHANNESBURG (miningweekly.com) - JSE-listed Merafe Resources has ended the first six months of this year on a stronger financial basis after reducing its net debt by 49% to R207.8-million, from R409.3-million in the six months to December 2016.

During the six months under review, Merafe continued to repay the bulk of its head office debt owing to Absa and Standard Bank, with a reported balance of R400 000 owed to the banks by period-end and unused debt facilities of R299.6-million.

“Management is negotiating new debt facilities with Absa, which comprises a R200-million unsecured, three-year revolving credit facility, which will replace the existing facility and will be used for general head office costs,” the ferrochrome firm said in its financial results report on Monday.

The previous R800-million facility was used primarily to finance Project Lion II, which has since been completed.

The half-year to June 30, had also been characterised by significant increases in production, revenue and headline earnings per share (HEPS) when compared with the first half of 2016.

Merafe on Monday reported a 743% year-on-year increase in HEPS to 19.4c, along with a 237% increase in earnings before interest, taxes, depreciation and amortisation to R865-million.

Profit for the six months under review reached R486.5-million.

Revenue from Merafe’s share in the Glencore-Merafe Chrome Venture jumped 7% to R2.56-billion, marked by a 6% increase in ferrochrome revenue to R2.3-billion.

An increase in ferrochrome prices during the period under review was partially offset by a 28% decrease in ferrochrome sales volumes to 157 000 t and a 14.3% strengthening of the average rand:dollar exchange rate.

The stronger rand had also partially offset an increase in chrome ore prices and an increase in volumes to 146 000 t; however, chrome ore revenue grew 15% to R298-million during the six months under review.

Production output followed a similar upward swing, with the company reporting a 10% uptick to a record high of 216 000 t.

During the six months to June 30, installed capacity use improved from 82% to 90%.

“The increase in production is primarily attributable to more furnaces that were operational period-on-period, coupled with pleasing furnace performances where two record months were achieved,” the company pointed out.

As at June 30, Merafe had a cash balance of R122.4-million.

Merafe declared a half-year dividend of R75.3-million, a 277% increase on the prior comparative period.