African Rainbow Minerals : 1H F2022 SENS release (133.15 KB)

African Rainbow Minerals Limited (Incorporated in the Republic of South Africa) (Registration number 1933/004580/06)

JSE Share code: ARI

ISIN: ZAE000054045 ("ARM" or the "Company")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2021 (1H F2022) AND INTERIM DIVIDEND DECLARATION

This short form announcement is the responsibility of the board of directors of ARM (the "Board") who acknowledge their responsibility to ensure the integrity of the interim results.

The details contained in this announcement are only a summary of the information in the full announcement and do not contain full details of the Company's financial performance and position or other relevant information about the business for the six months under review. Any investment decisions by investors and/or shareholders should therefore be based on the full announcement published on the Company's website at www.arm.co.zaand is available on the following link:

https://senspdf.jse.co.za/documents/2022/jse/isse/ARIM/HY2022.pdf

The full announcement is also available for inspection free of charge during business hours (excluding weekends and public holidays) from Thursday, 03 March 2022 at the registered office of ARM at ARM House, 29 Impala Road, Chislehurston, Johannesburg. In addition, copies of the full announcement may be requested by emailing the Company's investor relations department on [e-mail]

Salient features

• Headline earnings for the six months ended 31 December 2021 (1H F2022) decreased by 27% to R3 696 million or R18.87 per share (1H F2021: R5 039 million or R25.87 per share).
• An interim dividend of R12.00 per share is declared (1H F2021: R10.00 per share).
• Sale and purchase agreement signed, subject to the fulfilment of certain conditions precedent, for the acquisition of Bokoni Platinum Mine (Bokoni Mine) for a consideration of R3 500 million payable in cash. Bokoni Mine has the second largest platinum group metals (PGM) resource in South Africa.
• ARM Ferrous headline earnings decreased by 18% to R2 428 million (1H F2021: R2 955 million) mainly due to lower headline earnings in the iron ore division (owing to a

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decrease in US dollar iron ore prices) which was partially offset by improved headline earnings in the manganese division.

- ARM Platinum headline earnings decreased by 38% to R1 245 million (1H F2021: R2 021 million) largely due to negative mark-to-market adjustments related to the receivables balance as at 30 June 2021 following a decrease in the rhodium and palladium prices in the first three months of the period.

• ARM Coal headline earnings increased by R573 million to R351 million (1H F2021: R222 million headline loss) mainly due to higher export thermal coal prices.
• Basic earnings were R3 893 million (1H F2021: R4 868 million)

and included an attributable impairment reversal of R239 million on the investment in the Participative Coal Business (PCB).

• Net cash improved by R2 854 million to R11 056 million at 31 December 2021 (30 June 2021: R8 202 million).
• The group net asset value per share increased by 2% to R183.32 per share (at 30 June 2021: R179.08 per share).

Safety performance

Our operations delivered improved safety performances despite the challenges presented by Covid-19. The group lost-time injury frequency rate (LTIFR) per 200 000 man-hours improved to 0.36 (1H F2021: 0.40), while the total recordable injury frequency rate (TRIFR) improved to 0.67 (1H F2021: 0.82).

At 31 December 2021, Black Rock Mine had achieved 9.9 million fatality-free shifts, and on 14 February 2022, the mine reached a milestone of 10 million fatality-free shifts. The last fatality at Black Rock Mine was in April 2009.

Regrettably, one of our colleagues was fatally injured in a fall-of-ground incident at the Two Rivers Mine North Decline on 1 September 2021. We extend our heartfelt condolences to the family of Mr Jacob Puleng Leshaba, his friends and his colleagues.

We remain committed to zero harm and continue to work with all our employees to identify and minimise the occurrence of fatal hazards.

We continued to proactively prevent the spread of Covid-19 through strict health and safety measures. 6 033 Covid-19 tests were conducted in 1H F2022 of which 1 441 resulted in positive cases.

Sadly, we lost nine of our colleagues to Covid-19 in the period under review. We extend our condolences to the families, friends and colleagues of the employees who lost their lives to Covid-19.

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This brings to 44 the number of colleagues we have lost to Covid-19 since the onset of the pandemic.

It is encouraging to see that despite a spike in positive Covid-19 cases resulting from the Omicron variant, there has been a significant improvement in recovery rates and a marked reduction in the number of active Covid-19 cases. As at 30 January 2022 there were 27 active cases in the group, representing a 99% recovery rate.

Financial performance

Headline earnings

Headline earnings for the six months ended 31 December 2021 decreased by 27% to R3 696 million (or R18.87 per share) compared to the corresponding period headline earnings of R5 039 million (or R25.87 per share).

The average realised rand strengthened by 8% versus the US dollar to R15.02/US$ in 1H F2022 compared to R16.26/US$ in 1H F2021. For reporting purposes, the closing exchange rate at 31 December 2021 was R15.98/US$ (31 December 2020: R14.65/US$).

ARM Ferrous headline earnings were 18% lower at R2 428 million (1H F2021: R2 955 million) driven by a 33% decrease in headline earnings in the iron ore division which was partially offset by a 308% increase in headline earnings in the manganese division.

The iron ore division was negatively impacted by lower average realised US dollar prices, lower export sales volumes, higher freight rates and a stronger rand versus US dollar exchange rate.

In addition, iron ore headline earnings included a R479 million (pre-tax) (attributable basis) realised negative fair value adjustment on iron ore sales and a R133 million (pre-tax) (attributable basis) negative unrealised fair value adjustment on open iron ore sales.

Higher headline earnings in the manganese division were driven by an increase in the average realised US dollar manganese ore and manganese alloy prices which was partially offset by lower manganese ore sales volumes, higher freight rates and the stronger rand versus US dollar exchange rate.

ARM Platinum headline earnings decreased by 38% (or R776 million) to R1 245 million (1H F2021: R2 021 million). Modikwa Mine delivered a 29% increase in headline earnings to R594 million (1H F2021: R462 million) as the mine increased production volumes by 37% and

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reduced production unit costs (on a rand per 6E PGM ounce basis) by 13%.

Two	Rivers	Mine	headline earnings reduced to R725	million
(1H	F2021:	R1 279	million) mainly due to R669 million	negative

mark-to-market adjustments (1H F2021: R569 million positive mark- to-market adjustments), a 3% decrease in production volumes and a 16% increase in production unit costs (on a rand per 6E PGM ounce basis).

For more information on the mark-to-market adjustments, refer to page 13 of the full announcement.

Nkomati Mine reported a headline loss of R74 million (1H F2021: R280 million headline earnings) as the mine was placed on care and maintenance on 15 March 2021.

ARM Coal headline earnings of R351 million (1H F2021 headline loss: R222 million) included a re-measurement gain of R18 million (1H F2021: R2 million) on partner loans. Higher headline earnings at coal were mainly because of increased export thermal coal prices, which were partially offset by lower sales volumes due to Transnet Freight Rail (TRF) logistics challenges.

ARM Corporate and other (including Gold) reported a headline loss of R237 million (1H F2021: R345 million headline earnings) mainly due to re-measurement losses of R364 million in the current period (1H F2021: R120 million gain) and decreased management fees received of R643 million (1H F2021: R779 million).

Machadodorp Works reported a headline loss of R91 million (1H F2021: R60 million) as research into developing energy- efficient smelting technology progressed.

Financial position

At 31 December 2021, ARM's net cash was R11 056 million (30 June 2021: R8 202 million), an increase of R2 854 million compared to the end of the 2021 financial year. This amount excludes attributable cash and cash equivalents held at ARM Ferrous (50% of Assmang) of R4 428 million (30 June 2021: R4 099 million).

There was no debt at ARM Ferrous in either of these reporting periods.

Cash flow

Cash generated from operations increased by R2 799 million to R4 825 million (1H F2021: R2 026 million) after a reduction in

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working capital requirements of R1 036 million (1H F2021: R3 587 million increase), mainly due to a decrease in trade receivables.

In 1H F2022, ARM paid R3 917 million in dividends to its shareholders, representing the final dividend of R20.00 per share declared for F2021 (1H F2021: R1 346 million was paid representing the F2020 final dividend of R7.00 per share).

Net cash outflow from investing activities was R1 167 million (1H F2021: R13 million inflow) and included a net investment in financial assets of R314 million (1H F2021: R856 million net proceeds from financial assets).

Borrowings of R68 million (1H F2021: R177 million) were repaid during the period, resulting in gross debt of R1 026 million at 31 December 2021 (30 June 2021: R1 469 million). This excludes a R549 million (1H F2021: R23 million) reduction in ARM Coal partner loans that was repaid.

Investing in growth and our existing business

Our robust cash balance positions us well to invest in our operations and opportunistically pursue value-enhancing growth while continuing to pay dividends to shareholders. We continue to evaluate opportunities to grow our company, deliver competitive returns to shareholders and create sustainable value for our stakeholders.

We are pleased to have signed a sale and purchase agreement for the acquisition of the Bokoni Mine from Anglo American Platinum Limited and Atlatsa Resources Corporation, subject to the fulfilment of certain conditions precedent.

The acquisition gives ARM an opportunity to develop Bokoni Mine's large, high-grade resource which will enable ARM to scale its PGM portfolio, improve its global competitiveness and pursue further value-accretive organic growth.

Bokoni Mine was placed on care and maintenance in October 2017 owing mainly to adverse market conditions. We are developing a new mine plan for Bokoni Mine which will focus predominantly on mining the UG2 resource employing fully mechanised mining methods and targeting predominantly on-reef development.

This plan targets better ground conditions and higher-grade mining areas, while fully leveraging existing mining and processing infrastructure.

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