Healthy dividend declared early

Afrimat's board has declared a final dividend of 13 cents a share for the year to February 2012 (2011: 11 cents), taking the total dividend to 19 cents a share) (2011: 17 cents).

Annual results have not yet been published. However, the early declaration has been made to maximise the benefit for shareholders.

Afrimat buys leading clinker manufacturer

In March 2012 Afrimat's acquisition of S.A. Block (Pty) Limited, and in turn its wholly-owned subsidiary Clinker Supplies, which together make up the Clinker Group, was finalised. The acquisition will be included for the full FY2012.

The Clinker Group pioneered the use of clinker material in the concrete manufacturing and civil construction industries in the 1950s. It is the leading supplier and processor of raw clinker to the concrete manufacturing industry today and also manufactures its own concrete products from clinker material. The group extracts clinker raw material from various stock piles and operates well established and maintained processing and manufacturing plants. Key operations are located close to Vereeniging with support services based in Alrode and the group supplies customers in the wider Gauteng market and adjacent northern provinces.

Operations are situated close to the recently acquired and highly successful Glen Douglas Mine, creating

exciting opportunities for synergy. Further the acquisition provides Afrimat with a hedge against the volatile cyclicality associated with the aggregates industry. Clinker's distinct characteristics are difficult to substitute which make it resilient to market fluctuations. CEO Andries van Heerden says, "Based on current sales volumes, sufficient clinker raw material resources have been secured under contract for the next ten years – despite a shorter life than that of the average aggregate mine, the expected financial returns of this investment are attractive".

Van Heerden says that the acquisition gives the group a foothold in the clinker supply market and further entrenches the group's presence in concrete manufacturing. "The acquisition is in line with our strategy of seeking out new avenues for growth and presents us with a unique opportunity to generate further revenue opportunities through new product development as well as a refined, focused marketing strategy."

Glen Douglas bounding ahead

The new mining fleet at the Glen Douglas quarry, south of Johannesburg, is now fully operational. Since assuming ownership at the beginning of January 2011, Afrimat has engineered a substantial turnaround programme which Van Heerden confirms is yielding results ahead of the timeframe originally expected. "The extent of the turnaround has exceeded our most optimistic expectations, supported by significant infrastructure expansion supplied by the quarry."

The expansion of the quarry was in line with Afrimat's development strategy. Key focus has been optimising the

mine’s efficiencies and reducing costs. Looking ahead the Glen Douglas mine is expected to become one of the largest in Afrimat’s portfolio.

Afrimat is now well positioned to take advantage of the high volume output at Glen Douglas. Van Heerden says, "The metallurgical product from the Glen Douglas mine has a strong, loyal client base in the industrial minerals industry and the mine is already contributing nicely to our bottom line".

Deepened foothold in Northern Cape

Capitalising on the agility of its mobile crushing capability, Afrimat secured various crushing contracts in the Northern Cape for road building and mining customers. These contracts come at a particularly good time utilising capacity previously earmarked for the delayed N1 N2 Winelands project, which was originally planned to start in early 2012. Afrimat has secured stone resources and has started work on the contracts.

SANRAL is expected to spend close on R2 billion on four identified development corridors in the Northern Cape – the Diamond, Kalahari, Karoo and Orange River. Within these, the Orange River Corridor is a key focus in light of the economic growth potential in the vicinity.

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