JSE-listed Bauba Resources has reported total comprehensive losses of R52.3-million for the eight-month period ended February 28, compared with a loss of R31.4-million in the previous financial year.
With effect from January 29, Bauba changed its financial year-end from June 30 to February 28 to better correspond with the year-end of controlling shareholder Raubex Group.
On May 13, Bauba reported that, overall, revenue for the period had decreased by 7.5% to R256.2-million, down from R277.1-million a year before.
Meanwhile, investment in property, plant and equipment increased by 45% to R293.8-million, up from R202.6-million in 2021.
Bauba reported a basic, headline and diluted loss a share of 5.92c.
However, chrome concentrate production increased by 40% to 138 053 t, compared with the 98 590 t produced in the comparable eight-month period in 2021. The improvement in the chrome concentrate production yield from 55.5% to 67% was driven by 23.4% higher stoping production, while on-reef development production was flat, Bauba said.
Meanwhile, run-of-mine (RoM) production increased by 16% to 205 940 t, up from 177 508 t a year ago. RoM production for the 12 months to June 30, 2021, however, was 294 480 t.
Bauba said production for the period under review had been negatively impacted by adverse geological conditions, necessitating a revision of underground support standards and a reduction in stoping panel length, requiring significant redevelopment as well as prolonged safety stoppages.
These measures impacted production by about a month overall during the period from October to December last year, Bauba said.
The company said the cost of chrome ore, as well as insurance and freight (CIF) prices for benchmark 42% concentrate, as reported by global trading platform FerroAlloyNet, averaged at about $172/t for the period.
For comparison, prices between July 2020 to June last year averaged at about $148/t. The $24/t increase in the average chrome ore China CIF prices for benchmark 42% concentrate was offset by a similar increase in freight costs and an average stronger rand, Bauba said.
The company explained that freight costs during the period had increased significantly when compared to the prior reporting period.
The increase in freight pricing to record levels was caused by global demand exceeding available capacity and new capacity not becoming available quickly enough, Bauba stated.
In South Africa, factors negatively impacting freight costs included the ongoing Covid-19 pandemic, key port terminal assets requiring regular maintenance, civil unrest, cyber-attacks at the ports, as well as poor port operations.
Turnover increased by 1.9% to R256.2-million, from R251.3-million for the comparable eight-month period a year prior.
Turnover was partially offset by an increase in chrome concentrate production and an increase in chrome speciality-grade concentrate sales over the comparable eight-month prior period, the company explained.
Meanwhile, the cost of sales decreased by 4.05%, driven by the current reporting period of eight months compared to the prior reporting financial period, and partially
offset by increased RoM production of 16%, the increase in diesel costs, prolonged safety stoppages and adverse geological conditions resulting in the mine running below capacity and incurring substantial fixed costs without associated production.
Moreover, the cost per tonne of concentrate produced increased by 26.8%.
Bauba expects global stainless steel production to grow by 10% this year.
Meanwhile, strong Chinese consumption, coupled with lower South African production, has reduced Chinese port stocks from 3.8-million tonnes at the end of October last year to 2.8-million tonnes at the end of April.
This decrease in port stocks is expected to continue.
In addition, Bauba said there was a shortage of the kinds of high-grade concentrates it produces.