JSE-listed Assore has achieved record attributable earnings for the third consecutive financial year, as iron-ore prices increased and the rand:dollar exchange rate weakened.

The group on Thursday posted a 25% year-on-year increase in headline earnings to a record of R6.4-billion for the 12 months to June 30, while attributable earnings increased by 16% year-on-year to R5.9-billion.

A 10% weaker exchange rate; increases in iron-ore prices from $69/t to $80/t year-on-year; elevated but steadily declining manganese ore prices; and higher sales volumes of manganese ore, resulted in the notable increase in attributable earnings, CEO Charles Walters said.

Assmang, Assore’s joint partnership with African Rainbow Minerals, reported a 41% increase in headline earnings to R10-billion, with Assore's 50% share in Assmang contributing R5-billion towards its headline earnings.

Assmang's attributable earnings increased by 29% year-on-year to R9.1-billion on a 100% basis, driven mainly by a 29% year-on-year increase in sales to R35.6-billion.

The joint venture’s iron-ore division delivered earnings of R6.8-billion, an increase of 106% year-on-year, while the manganese division’s contributions decreased by 39% to R2.3-billion, owing to a R1-billion impairment charge relating to its investment in Sakura Ferroalloys – a manganese smelter in Malaysia.

Iron-ore sales volumes declined by 2% to 17.5-million tonnes, with production down 4% to 17.8-million tonnes.

Iron-ore prices rose “beyond expectations” during the period under review, Walters told Mining Weekly Online, noting, however, that a correction had gotten under way in the new financial year.

Manganese ore sales volumes increased by 8% to 3.43-million tonnes, which, in combination with stable prices and the weak rand:dollar exchange rate, led to higher earnings from manganese ore.

Production volumes decreased by 8% to 3.4-million tonnes as the Gloria mine undergoes a modernisation and optimisation initiative.

Meanwhile, capital expenditure (capex) in Assmang increased from R3.1-billion in 2018 to R4.4-billion in the year under review.

The iron-ore division spent R2.1-billion, a year-on-year increase of 18%, mostly to replace mining fleet machinery, while the manganese division’s capex increased by 77% to R2.3-billion, mainly owing to R662-million in capital spent on the modernisation and optimisation of the Gloria mine, as well as a new slimes dam and thickeners for water recovery at the Nchwaning operations.

By the end of the 2019 financial year, 93% of the approved and revised R6.9-billion capex budget on the Black Rock expansion project had been committed or spent and 25% of the approved capital of R2.7-billion for the Gloria mine modernisation and optimisation had been spent.

Meanwhile, the balance of the group's operations reported a 13% year-on-year decrease in headline earnings to R1.4-billion, while the contribution to the group's results from the Dwarsrivier chrome ore operation was R516-million, 41% down from the R875-million contribution in 2018, owing to lower prices for chrome ore and increased operating costs.

“The reduced profit was compounded by a labour strike suffered by the mine in March, which accounted for the decrease of 4% in production volumes,” said Walters.

The weaker rand:dollar exchange rate and chrome sales volumes of 1.6-million tonnes partially negated the decrease in prices, with revenue decreasing by 4% to R3.6-billion.

Strong cash generation in the group resulted in group net cash increasing by 14% to R9-billion.

The group declared a record dividend of R24 a share for the financial year.

“Slower global growth is expected into next year. Continued growth in China, albeit slower than previously anticipated, should support prices for Assore’s products in the near term,” Walters concluded.