Exxaro CEO Mxolisi Mgojo
Photo by: Creamer Media
JOHANNESBURG (miningweekly.com) – Black-empowered coal mining and energy resources company Exxaro on Thursday rewarded shareholders with a double dividend on lower profit and revenue in the six months to June 30.
The company declared an interim and special cash dividend and reported early value realisation at its Belfast coal project, which has produced its first coal ahead of schedule.
The interim cash dividend of 864c a share was 63% up on last year on a year-on-year basis and a special cash dividend of 897c a share was declared from the disposal proceeds of Tronox, the mineral sands company from which Exxaro is divesting.
Despite adverse economic and market conditions in the period, Exxaro CEO Mxolisi Mgojo said the company continued to pursue its defined strategic priorities of safety, portfolio optimisation, productivity initiatives for improved operational performance and disciplined capital allocation.
Exxaro, which has been fatality-free for 29 consecutive months, reported higher core headline earnings per share of R12.01, which is 20% up on the corresponding period of last year and 4% up on the second half of 2018.
Given that coal and other commodity pricing declined sharply in the period, the company considers its results to be “healthy” in the circumstances.
The group was boosted by its investment in the Sishen Iron Ore Company, which yielded a R2.7-billion dividend return on the strong performance of Kumba Iron Ore in the six months.
The company’s broad-based black economic empowerment recognition improved to Level 2, 178 new permanent jobs created through its social investments and rehabilitated land mass increased.
A 10% decrease in revenue to R12-billion was reported and earnings before interest, taxes, depreciation and amortisation fell 15% to R2.8-billion on sharply lower export coal prices and challenging domestic and international trading conditions.
On the safety front, Leeuwpan coal mine has had 29 fatality-free years and Matla colliery 21 fatality-free years.
Recognising the group’s broader environmental, social and governance (ESG) efforts, the JSE’s FTSE Russell ESG Index has entrenched Exxaro as the world leader in ESG performance in mining. Exxaro increased its already-leading average score of 3.7 out of 5, to 4.1, compared with 2.1 for global coal peers and reported improved electricity and water consumption metrics during the period.
The transfer of Arnot mine and the disposal of its stake in US-listed Tronox advanced, with the Arnot transaction now pending one last remaining condition. The sale of the Tronox interest has progressed well, grossing a total of R5-billion cash received so far in 2019.
It remains with an interest of about 10% in the US-listed entity and 26% in the South African operations. The group continues returning excess cash to shareholders as promised, whether generated by its non-managed investments or by its own cash-generative coal operations. Exxaro is also exploring options for the disposal of its interest in Black Mountain Mining.
“For the remaining coal business, portfolio optimisation will involve maximising the value of our coal resource through an ‘early value’ strategy, and we are evaluating options in this regard,” Mgojo said in a release to Creamer Media’s Mining Weekly Online.