Merafe Resources Limited (JSE and A2X: MRF) has released its production report for the six months ending 30 June 2024. The company’s attributable ferrochrome production from the Glencore Merafe Chrome Venture decreased by 17%, totaling 154kt, down from 185kt in the same period last year. This decline is primarily due to the non-operational Rustenburg smelter, which has been shut down in 2024 because of challenging market conditions.
Ferrochrome Production (kt)
| Period | 2024 | 2023 |
|---|---|---|
| H1 | 154 | 185 |
Trading Statement
In compliance with paragraph 3.4(b) of the JSE Limited Listings Requirements, Merafe has issued a trading statement. The company expects its financial results for the six months ending 30 June 2024 to show a significant decline in earnings compared to the previous year.
Earnings Per Share (EPS)
Merafe anticipates reporting basic earnings per share (EPS) between 24.6 cents and 33.0 cents. This represents a decrease of 21% to 41% from the 42.0 cents per share recorded in the prior comparative period.
Headline Earnings Per Share (HEPS)
The company expects headline earnings per share (HEPS) to be between 24.0 cents and 32.4 cents, down by 23% to 43% from the 42.0 cents per share reported previously.
Earnings Overview
| Metric | 2024 (Expected) | 2023 | Decrease (%) |
|---|---|---|---|
| EPS | 24.6 – 33.0 cents | 42.0 | 21% – 41% |
| HEPS | 24.0 – 32.4 cents | 42.0 | 23% – 43% |
Impact of Softer Commodity Prices
The expected decline in EPS and HEPS is mainly due to softer commodity prices over the reporting period. The company’s profitability has been affected by the global reduction in commodity prices, impacting revenue generation.
Cash Balances
Merafe’s cash and cash equivalents have shown a slight increase. As of 30 June 2024, the company reported cash balances of R1,717 million, up from R1,656 million at the end of December 2023.
Cash and Cash Equivalents
| Date | Amount (R’m) |
|---|---|
| 30 Jun 2024 | 1,717 |
| 31 Dec 2023 | 1,656 |
Breakdown of Cash Balances
The reported cash balances include R550 million held directly by Merafe and R1,167 million representing Merafe’s share of the cash in the Glencore Merafe Chrome Venture. The Venture’s cash reserves also cover future environmental rehabilitation obligations, with Merafe’s portion amounting to R344 million.
Conclusion
Merafe Resources has faced a challenging first half of 2024, with a significant reduction in ferrochrome production and a notable decline in earnings. The company’s proactive disclosure highlights the impacts of market conditions on its operations and financial performance. Shareholders and investors will be keenly awaiting the detailed financial results expected in August.