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Afrimat produces solid results, backed by diversification strategy and strong cash generation


– Operating profit up 11,0% to R353,1 million
– Headline earnings per share (HEPS) up 1,1% to 183,9 cents
– Strong balance sheet with net cash position
– Interim dividend per share of 36,0 cents
– Return on net operating assets 32,9%
– Operating profit margin 22,7%
– Net cash from operating activities of R333,7 million

29 October 2020 – Afrimat, a leading open-pit mining company providing Industrial Minerals, Bulk Commodities and Construction Materials, today released interim results for the six months ended 31 August 2020. The Group, which has built up a track record of excellence in small-scale mining and materials supply, delivered another set of solid results despite the effects of the sudden and unexpected global Covid-19 pandemic.

According to Afrimat CEO, Andries van Heerden, the disruption was countered by Afrimat’s diversification strategy as well as the implementation of proactive measures to manage and minimise the impact of the pandemic, bolstered by cost reduction and efficiency improvement initiatives.

Operating profit increased by 11,0% to R353,1 million despite a decrease of 9,4% in revenue. The Group ended the period with a net cash position compared to a net debt:equity ratio of 9,4% in the prior year and cash and cash equivalents of R330,6 million, an increase of 170,0% from the comparative 2019 period. The effective tax rate increased from 16,5% to 28,4% in the current period, mainly due to the utilisation of previously unrecognised assessed losses in Afrimat Demaneng Proprietary Limited (‘Demaneng iron ore mine’), in the prior year. An interim gross dividend of 36,0 cents per share (August 2019: 36,0 cents) for the period was declared.

Van Heerden explains how what he calls the “trifactor in our favour” has allowed Afrimat to thrive, despite the challenges. “Our diversification strategy proved its worth, most certainly so during the pandemic; our values-based entrepreneurial culture is paying off; and a very strong balance sheet enabled growth. In effect, a self-closing loop was created by implementing this strategy, using the cash generated by successful operations to pay down debt, and surplus cash to make further acquisitions, which in turn leads to further diversification, which in turn drives further growth – you get the picture.”

He says that what had started out as a simple construction materials business had gradually become more sophisticated with the addition industrial minerals, and then again with the addition of iron ore. “The potential acquisition of the Nkomati mine will add anthracite to our portfolio, thereby again enhancing our skills and our commodity diversity, while the Coza Mining acquisition will further strengthen our iron ore capacity.”

Van Heerden gave a brief update on Nkomati, saying that as a large creditor Afrimat had applied for business rescue proceedings, which have been granted by the court, and had received shareholder approval to proceed with the scheme of arrangement that had been proposed. “We believe that the competitive advantages of geographic location and unique metallurgy – some of the critical criteria we use when evaluating any potential – are in place at Nkomati.”

“This, coupled with the high market demand for high quality, clean burning anthracite, will add tremendous value to our Bulk Commodity diversification strategy. High-quality anthracite remains a sought after product by large smelters in South Africa for metals’ smelting, fabrication and furnaces.”

In respect of Coza, Van Heerden said that this high-quality ore resource, which consists of the Jenkins, Driehoekspan and Doornpan mines located close to Afrimat’s Demaneng iron ore mine in the Northern Cape, would give Afrimat the ability to leverage resources due to the proximity to Demaneng.

“This acquisition will also potentially allow for a local product supply agreement to ArcelorMittal, whereas Demaneng iron ore mine is solely focused on the export market.”

Operational review

Afrimat entered the national lockdown with a robust balance sheet, positioning the Group well for the uncertainty that lay ahead. “The impact of the lockdown was dampened by the partial reopening of the Demaneng iron ore mine and certain Industrial Minerals operations early during the lockdown period,” explains Van Heerden, saying that the reopening was undertaken with utmost care to ensure the safety and well-being of all employees.

From 20 April 2020, Afrimat ramped operations up according to market demand and in line with government regulations. All operations recovered from the Covid-19 impact and returned to profitability before August 2020.

“Our product range is now well diversified and consists of Construction Materials including aggregates and concrete-based products, Industrial Minerals including limestone, dolomite and silica, and Bulk Commodities, which is currently made up of iron ore.”

In line with Afrimat’s drive for a positive workplace culture, good labour relations continued during the period under review, with no labour action occurring in the period. “We are, as always, committed to creating and sustaining harmonious relationships in the workplace and addressing issues proactively. We continue to prioritise employee development, training and education of all our people.”

The Bulk Commodities segment, consisting of Demaneng iron ore mine, continued to make an excellent contribution to the Group results, delivering growth of 135,8% in operating profit to R325,8 million. The excellent performance was largely due to favourable iron ore pricing during the reporting period.

Industrial Minerals businesses across all regions delivered satisfactorily results. The segment was, however, affected by the lockdown and experienced a decrease in operating profit of 60,6% from R62,4 million to R24,6 million.

The Construction Materials segment was impacted considerably by the national lockdown, resulting in no revenue for the month of April, as well as limited revenue during May and June 2020, hence a decrease in operating profit of 97,7% was recorded from R122,2 million to R2,8 million. The segment, however, recovered post the hard-lockdown levels and is now back to monthly sales levels similar to those experienced prior to the lockdown.


Van Heerden says that while there is limited clarity on the future impact of the Covid-19 pandemic, the Group has recovered from the initial impact and is poised to deliver a strong performance in the second half of the year, adding that Afrimat would, however, continue to diligently monitor the impact and management of Covid-19.

“We are also well positioned to capitalise on our strategic initiatives and future opportunities, with prospective growth continuing to be driven by the successful execution of our strategy. Recent and current acquisitions are bringing a wider product offering to the market. This is likely to include expanding the Industrial Minerals range, and possibly exploiting opportunities in the Construction Materials sector. However, we will remain true to our expertise and remain conservative in our approach to our balance sheet.”

Van Heerden concluded by saying that operational efficiency initiatives aimed at expanding volumes, reducing costs and developing the required skill levels across all employees, remain a key focus for all Afrimat operations.


Issued for: Afrimat Limited
Contact: Andries van Heerden, Chief Executive Officer (CEO)
Tel: 021-917-8853

Account: Keyter Rech Investor Solutions
Contact: Vanessa Rech
Tel: 087-351-3814 or 083-307-5600

Tanya Pretorius

Afrimat: Head of Communications

Vanessa Ingram

Keyter Rech Investor Solutions