JSE-listed chrome miner Chrometco says that despite the impact of the low chrome price during the latter part of the financial year ended February 29, the company’s results had improved compared with the prior financial year's performance.

In the year under review, the company’s Black Chrome mine produced at a steady state of 90 000 t a month.

Chrometco reported a headline loss a share of 1.12c for the period under review, a 26% improvement on the headline loss a share of 1.52c reported for the 2019 financial year.

The company’s loss a share improved by 65.9% year-on-year to 1.20c, from a loss a share of 3.52c in the prior period.

Subsequent to the year under review, Chrometco says its beneficiation operations continued production at lower levels by processing ore stockpiles, but that underground production from Black Chrome was under care and maintenance for the entire five-week hard lockdown period from the end of March to early May.

To make up for this loss, the company will shorten its December break and work back one full weekend every month for the rest of the calendar year.

During May, the underground operations at the mine effectively operated at 75% of normal production. From June, the underground operations are back at full capacity, while opencast operations resumed full capacity from May 1.

“The five-week lockdown resulted in a shortfall in supply of chrome owing to a significant decrease in chrome production in South Africa and the resulting decrease in exports of chrome to China.

“The shortfall in supply caused the price of 42% upper group two concentrate CIF to increase from $114/t on April 10 to $167.5/t on May 31.

Additionally, the weak rand has further increased sales in rand terms,” the company reports.

Chrometco adds that, as the plant continued operations during the April lockdown period to a certain extent, Chrometco was not hit as hard as the rest of the industry. This is owing to the group being able to feed its stockpiles to the plant rather than being solely reliant on the mine.

Meanwhile, as at the end of the year under review, the company’s liabilities exceeded its assets by R450-million, compared with an exceedance of R180-million in the prior corresponding year.

Of the trade payables, R256-million is payable to BBA Resources, a related party, and the terms of payment are under negotiation in order to improve the liquidity position of the group.

Chrometco generated cash from operating activities of R241-million, compared with R280-million generated in the prior corresponding year, and incurred a loss for the year of R89.2-million, compared with R153-million in the prior year.

The operations turned profitable during May as a result of the increase in chrome prices and the weakening of the rand and, consequently, earnings before interest, taxes, depreciation and amortisation broke even in May, making up for the lockdown losses.

With underground production levels at the Black Chrome mine back to 100% from June 1, together with the increased rand chrome market prices, the directors believe the group will generate sufficient cash from operations to continue as a going concern for the next 12 months..