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Cape Town - Merafe Resources [JSE:MRF] stayed a darling among investors on Wednesday morning after the company committed to continue paying dividends and cutting its debt.
The share price added another 4.23% to R1.48 in early trade on Wednesday after closing the previous session up 9.2%.
CEO Zanele Matlala said on Tuesday at the presentation of the companies half-year results that the ferrochrome producer has declared a cash dividend of R28m, "a signal of our intention to continue declaring dividends and reducing our debt".
She said although the five-month-long platinum strike did have an impact on the company's costs, it was not significant.
"We’ve had a very exceptional six months both operationally and financially. On the operational side, ferrochrome was up 268 000 tonnes; the five-month platinum strike came to an end - it did have an impact on our costs but not significantly," she told Fin24 in a video interview.
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She said on the projects side, project Lion II (two) has come into production: "The first furnace coming in April (this year) and the second in June and the project has had a very good safety performance."
On the market side, she said there was excellent growth on stainless steel production - 10.5% for the six months and "that’s still expected to go up 9% for the full year". Said Matlala: "That’s very positive for us because we supply into that sector, so we expect ferrochrome demand to follow suit."
On the financial side, revenue was up 35%, headline earnings 134% "which is quite a significant growth, and we’ve generated cash of R265m".
Looking forward, Matlala said stainless steel production is expected to grow by 9% for the rest of the year and in the short term is expected to grow by 5%, which again should be followed by ferrochrome demand.
"As a lowest-cost producer in South Africa we’re in a very good position to be able to participate in that growth in demand," said Matlala.
- Fin24
