Afrimat experiences exceptional growth, says CFO Pieter de Wit
Afrimat’s three business segments saw a return to pre-Covid-19 volumes of operation.
Afrimat has delivered exceptional results on the back of favourable iron ore prices, which translated into strong operating cash flows. The mining company reported a 55.4 percent increase in revenue from R1.6 billion to R2.4 billion, culminating in an increase in operating profit of 65 percent from R353.1 million to R582.8 million for the six months ended August 2021.
“We are proud that all three segments of the business – construction materials, industrial minerals and bulk commodities – experienced exceptional growth for this period compared to the corresponding period in the prior year,” says CFO Pieter de Wit.
Both the industrial minerals and construction materials businesses experienced a return to pre-Covid-19 volumes across all regions. The industrial minerals business delivered an increase in operating profit of 108 percent from R24.6 million to R51.1 million. The construction materials business also experienced a significant improvement in operating profit from R2.8 million to R79.5 million.
The bulk commodities segment, comprising the Demaneng and Jenkins iron ore mines, and the Nkomati anthracite mine, saw an increase of 39.3 percent in operating profit to R453.7 million. “The segment benefitted from favourable iron ore pricing and from the new mines, Jenkins Iron Ore and Nkomati Anthracite,” Pieter explains.
Afrimat ended the period with net cash flows from operating activities of R806.5 million, an increase of 141.7 percent from 2020.
“Our business has generated a lot of cash during this interim period, which has enabled us to repay the debt we used to buy Nkomati and Jenkings,” Pieter says. “After we have settled this debt, the balance sheet will still be in a net cash position, which places us in a good position to fund future opportunities.”
And while Afrimat continues to work on efficiency improvement initiatives, Pieter explains that their current focus is to refine the mine planning and business plan of Gravenhage mine in order to identify the most optimal, lowest risk implementation strategy to ensure that it is ready for the execution, once it gets all the approvals.
“We are not holding back on new investments,” he adds. “We are working on the execution plan of the Gravenhage manganese mine, which is a new opportunity.”
Pieter says Afrimat is also busy with an exciting opportunity in the industrial minerals segment, which will be announced in due course. “We would like to continue our growth path and see a lot of opportunities currently in South Africa.”