“The Group reported record headline earnings for the year, despite lower dollar prices for its products which were more than offset by the weaker Rand. Demand for the Group’s products remains strong, underpinned by continuing growth in world steel production,” said Des Sacco, chairman of Assore.
[DATA ASR:Assore Limited] is primarily engaged in ventures involving base minerals and metals, and also holds a 50 per cent stake in mining company, Assmang Proprietary Limited which it controls jointly with African Rainbow Minerals Limited.
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Headline earnings increased by 19.7 per cent from 3.5 billion rand in 2013 to 4.2 billion rand this year due to growth in headline earnings at Assmang.
The company declared a final dividend of 550 cents per share and is payable to shareholders on the 29 September 2014.
Prices for iron ore however declined substantially by 16.5 per cent during the second half of the period due to an oversupply in the market.
Manganese iron ore prices remained strong in the first half of the year but declined during the second half due to an oversupply primarily caused by new South African producers entering the market.
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Chrome ore prices fluctuated throughout the period with the average US dollar price being five per cent lower than the previous year.
“In the early part of the year, the Eskom “buyback” arrangements were concluded with ferrochrome producers, resulting in producers curtailing production, freeing up additional chrome ore for the export market and depressing prices,” said the statement.
During the second half of the year, the platinum strike in South Africa affected UG2 grade chrome concentrate, resulting in the recovery of prices for chrome ore.
All factors contributed to Assmang’s turnover increasing by 12 per cent while impairment charges at its Machadodorp operations totalled 519 million rand, reducing the group’s headline earnings by 187 million rand.
Sales volumes of iron ore were lower due to restricted plant availability, unreliable water supply and reduced railage capacity.
The company said that Assmang’s ferromanganese project in Malaysia, which it holds a 54.36 per cent stake in, is progressing according to schedule with its first two furnaces expected to be commissioned in October 2015.
The furnaces are set to produce 110 000 tonnes of high carbon ferromanganese and 70 000 tonnes of silico manganese alloys annually. The total project will cost Assmang 328 million US dollars.
Looking ahead, Assore believes that world steel production will remain strong throughout the year, specifically in Asia, North America and Europe.
The index price of iron ore in June 2014 was 31 per cent lower than in 2013 and Assore expects it to trade in this lower range for the foreseeable future.
“In addition to the impacts of the above market dynamics, the results of the Group remain significantly exposed to fluctuations in exchange rates,” concluded the statement.