JSE-listed materials supplier Afrimat should be in full control of the Glen Douglas openpit dolomite mine, in Gauteng, by January 1, says Afrimat CEO Andries van Heerden.
The newcomer, which joined the Afrimat fold as a result of the company鈥檚 diversification strategy, produces metallurgical dolomite, aggregates and agricultural lime, with most of its product going to steel producers.
鈥淭his business can turn Afrimat鈥檚 fortunes,鈥?says Van Heerden.
He notes that production costs at the former Exxaro mine are higher than those of Afrimat 鈥?a recognised low-cost producer 鈥?which leaves room for signaerofall dry sag millificant improvement.
Turning around the Glen Douglas operation is, however, an intensive operation, and Afrimat will probably not make any new 鈥╝cquisitions over the next six months, says Van Heerden, 鈥渦nless something walks in the door and begs us to take it鈥?
Apart from turning Glen Douglas into a highly profitable operation, Afrimat is alriver sand mining equipmentso focusing its attention on securing work on the N1/N2 Winelands project, which is valued at roughly R6-billion, with the value of the 鈥╝ggregate portion of the contract estimated at around R1-billion.
Van Heerden says Afrimat will not be able to handle such a contract in full should it be awarded work on the roads project, but it wigranite stone crushing machinery suppliers in brazilll seek a joint venture partner.
He also notes that Afrimat鈥檚 quarries are well scattered along the route, providing the company with an advantage over competitors.
Afrimat reported revenue of R456-million for the six months ended August 31, up 16%, compared with revenue for the corresponding period last year.
Headline earnings increased by 5%, to 29,9c a share, while operating profit dropped by 2,9% to R64,65-million. Operating margin fell to 14,2%, down from 17%.
Van Heerden 鈥╯ays that he is satisfied with the group鈥檚 鈥╥mproved performance, especially given tough economic conditions for most of the period.
Just under 90% of the company鈥檚 operating profit came from the aggregates division, with 3% flowing from the ready-mix division and 10% from concrete manufactured products.
Van Heerden says that the aggregates and concrete manufactured products divisions did well, but that the ready-mix business experienced a drop in volume as the KwaZulu-Natal low-cost housing market came to a standstill.
He adds that, overall, business was especially 鈥╞risk in August, following a slow first quarter, with the trend continuing in September and October, which bodes well for the remainder of the financial year.
Van Heerden also notes that Afrimat is continuing to buy back its shares, with the total shares repurchased standing at 4,56-million.
He says that the buy-back programme serves as a 鈥済ood way for Afrimat to invest its cash鈥? while the company also believes its share 鈥渋s sig-鈥╪ificantly undervalued鈥? Van Heerden believes the company鈥檚 share price does not reflect the Glen Douglas acquisition, for example.
Afrimat declared an interim dividend of 6c a share, matching the interim dividend in 2009.
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