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April 10, 2013 5:49 pm
The company, whose share price has more than halved in the past year amid production delays, reported an annual pre-tax profit of $4.3m, up from a $40.4m loss in 2011. However, this was down to a non-cash $288.3m accounting gain from the company’s contract with China’s state-owned Shandong Iron & Steel Group.
Excluding that, operating losses widened from $41.4m to $225.6m because of greater capital expenditure.
Keith Calder, African Minerals’ chief executive, said the company would complete its first phase of development on the Tonkolili project in Sierra Leone – which was originally projected for 2012 – in June.
“We’re aiming for by May or June to be producing [the equivalent of] 20m tonne per annum – over the last three quarters we’ve been putting a lot of effort into making sure the infrastructure is up to scratch,” he said. “We expect our share price to improve as we demonstrate we can deliver the tonnages.”
The second phase of the Tonkolili development could result in production expanding to 35m tonnes a year by 2019.
Diluted earnings per share rose to 10 cents from a 4 cents loss in 2011.
Mr Calder said he expected iron ore prices to remain robust despite analyst worries that slower growth in China could adversely impact demand.
“The Chinese government are going to announce their infrastructure going forward in the next few months and I’m comfortable that there’s strong demand,” he said. “I think the price of iron ore will maintain itself over $100 a tonne . . . I don’t see a sustainable two-digit price for iron ore.”
Last year African Minerals sold 25 per cent of the Tonkolili project to Shandong Iron & Steel Group for $1.5bn, funding its development plans, and counts China Railway Materials Commercial Corporation among its largest shareholders.
Shandong has the rights to take 9.8m tonnes of African Minerals’ iron ore production, according to the company.
African Minerals’ share price was hit when former chief executive Alan Watling unexpectedly quit the miner last May to be replaced by Mr Calder, the former chief executive of Western Coal.
Frank Timis, the company’s executive chairman founded African Minerals as Sierra Leone Diamond Company, before listing the business on Aim, London’s junior market. In 2008 the company was privately censured by the London Stock Exchange and fined £75,000 for putting out misleading and unrealistically optimistic information in late 2006.
African Minerals’ shares closed 14 per cent or 32.3p higher at 257p.
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