Headline earnings for the six months to 31 December 2017 (the current period) decreased by 4,6% to R2,4 billion, compared to the same period in the previous financial year (the previous period, or 2016). This decrease comprises higher headline earnings in Assmang Proprietary Limited (Assmang), which were 21,7% higher than 2016 but with lower headline earnings from the rest of the group’s operations, which were 9,3% lower than 2016, at R701,8 million.

The group’s major interests consist of its 100% ownership of Dwarsrivier and its 50% interest in Assmang which it controls jointly with African Rainbow Minerals Limited (ARM). In accordance with International Financial Reporting Standards (IFRS), the group accounts for Assmang’s results using the equity accounting method.

The markets for the group’s commodities remained firm, with world economic growth for the 2017 calendar year (CY2017) estimated at 3,6%, while China’s economy increased by 6,9% over the same period. These growth rates supported increased crude and stainless steel demand, with crude steel production for CY2017 5,3% higher than the previous year, at 1,691 million metric tonnes. Global production of stainless steel for CY2017 was 5,6% above the previous year, with the increase in China recorded at 5,8%.

These conditions led to prices that were generally slightly higher for the group’s products, which are reflected in the table below:

Average price, US dollar, delivered in China     Half-year
31 December
31 December
Iron ore (62% iron content, "fines" grade per metric tonne)          68        65         
Manganese ore (44% grade manganese content per dry metric tonne unit)          6,30        6,02         
Chrome ore (44% chrome content material per metric tonne)          195        224      (13)    

Even though demand for chrome ore remained healthy, prices over the current period were lower than 2016. This was mainly due to an abnormally high price spike exceeding US dollars (USD) 400 per metric tonne that occurred in 2016 as a result of extremely low chrome ore inventories as well as higher levels of stainless steel production in China. These inventories normalised to a level of 2,3 million tonnes for the current period, which brought about lower prices.

Environmental regulations imposed in China have resulted in strong demand for high grade iron ores, including "lumpy" iron ore. The premium for "lumpy" material, was higher by nearly USD5 per metric tonne in the current period, compared to 2016. Over 50% of Assmang's iron ore is sold into the market as "lumpy" grade material.

Demand for manganese ore remained strong, driven by weaker than expected Chinese domestic production of manganese ore, increased production of crude steel and significantly higher Chinese electrolytic manganese metal (EMM) production. This resulted in an undersupplied market, thus providing support for strong but stable prices for both the high-grade (44% manganese content) and the lower-grade (37% manganese content) indices.

The alloy market remained tight as growth in supply was not sufficient to offset the increases in demand. These conditions, together with robust manganese ore prices, strong steel consumption and high steel prices resulted in alloy prices across the grades being maintained at the higher levels as seen at the start of the 2017 calendar year.

The average level of the SA rand/US dollar exchange rate was 6% stronger across the current period, which offset the impacts of the improved US dollar selling prices and sales volumes to a limited extent.


The group continues to maintain and achieve exceptional safety records. In 2017, Assmang's operations received three safety awards at the annual Mine Safe conference, as arranged by the mining industry, Department of Mineral Resources (the DMR) and organised labour. Black Rock Manganese Mine was awarded first place for best safety performance in underground mines, while Beeshoek Iron Ore Mine (Beeshoek) achieved first place for best safety performance for base metal mines and second place for the best year-on-year safety improvement. Beeshoek was also the recipient of the best safety performance award from the DMR for achieving 16 000 fatality-free production shifts. On 16 January 2018, Black Rock Manganese Mine achieved 6 million fatality-free shifts.

Sales volumes

Increased sales volumes of iron ore were realised, in both the export and local markets. Sales volumes of manganese ore were well above the levels of the previous period, due to a combination of factors. The logistical issues at Port Elizabeth, which restricted sales volumes in the previous period, were mostly resolved by July 2017. In the current period, railage availability was also higher as a result of increased export capacity via Saldanha Port. This additional availability was met by increased production from Nchwaning II shaft at Assmang's Black Rock manganese mines. Production at Sakura Ferroalloys SDN BHD, Malaysia (Sakura), has reached and exceeded capacity, resulting in higher sales volumes of manganese alloys. Continued strong demand for chrome ore was evident across the period and improved production levels at Dwarsrivier enabled the group to achieve record sales volumes of chrome ore for a six-month period (refer "Dwarsrivier" below). The following table sets out the sales volumes achieved by the group for the current period:

Metric tonnes ‘000    Half-year
31 December
31 December
Iron ore          9 130        8 805         
Manganese ore*        1 556        1 417     10    
Manganese alloys          162        139      17     
Chrome ore          794        733         

*Excluding intra-group sales to Cato Ridge Works.


Mining and beneficiation efficiency improved by 3,1% and 0,7% respectively compared to 2016. These efficiency improvements, together with labour productivity improvements resulted in an overall increase in production volumes of 7,2%. Inflationary increases were effectively countered by improved efficiencies and cost of production was marginally higher (0,1%) on a per-tonne basis. A new monthly production record was achieved in July 2017. Cash flow (before capital expenditure) was R990 million following record half-year sales volumes.

Expansion and capital expenditure

Capital expenditure in Assmang was consistent with that of the previous period, at R1,2 billion. Approximately half of this amount was spent in Assmang's Iron Ore division, with R522 million spent on waste-stripping. A further R285 million (2016: R652 million) was spent in its Manganese division on the manganese expansion project, which stood at 83,6% completion at December 2017. The project is expected to be completed in 2020, at which stage an overall manganese capacity of 4 million tonnes will be available from the Black Rock mines. Dwarsrivier spent R130 million, mostly on sustainability and compliance items. Exploration and related activities continue in IronRidge Resources Limited (AIM-listed), in which the group currently holds 29,5%.


World economic growth for the 2018 calendar year is forecast to be stronger than CY2017, at 3,7%. It is also expected that improved economic growth levels will be realised in all major areas in the world, and not merely in the East, as has been the case in recent years. As a result, strong demand for the group's products is anticipated in the short term and prices are expected to remain within relatively stable ranges. It is also expected that Chinese environmental policies should continue to support demand for the group's high-quality products.

For iron and manganese ores, the relatively higher current price levels may attract additional supply into these markets and depending on economic growth levels, may put pressure on price levels in the medium term.


The results in this announcement include the final dividend relating to the previous financial year of 800 cents (2016: 500 cents) per share, which was declared on 29 August 2017, and paid to shareholders on 26 September 2017. Based on the level of earnings for the period, the board has declared an interim dividend of 1 000 cents (2017: 600 cents) per share, which will be paid to shareholders on 19 March 2018.

Accounting policies and basis of preparation

The directors of Assore take full responsibility for the preparation of this announcement. The financial results for the period under review have been prepared under the supervision of Mr RA Davies, CA(SA) and in accordance with IAS 34 - Interim Financial Reporting and comply with IFRS, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Pronouncements as issued by Financial Reporting Standards Council, the Listings Requirements of the JSE Limited (JSE) and the Companies Act No 71 of 2008, as amended. The accounting policies applied are consistent with those adopted in the financial year ended 30 June 2017.


Shareholders are advised that following his appointment as Chief Financial Officer to Assore in February 2017, Mr Ross Davies has been appointed as a director, effective 20 February 2018. Ross qualified as a chartered accountant in 1994 and joined the group as Group Accountant in 2008.

Declaration of interim dividend

Shareholders are advised that on 20 February 2018, the board of directors (the board) approved Interim dividend number 122 (the dividend), of 1 000 cents per share (gross) for the half-year ended 31 December 2017.

In terms of paragraph 11.17 of the Listings Requirements of JSE Limited, shareholders are advised of the following with regard to the declaration:

  1. the dividend has been declared from retained earnings;
  2. the local dividend tax (dividend tax) rate of 20% will apply;
  3. the net local dividend amount is 800 cents per share for shareholders liable to pay the dividends tax;
  4. the issued ordinary share capital of Assore is 139 607 000 shares, of which 36 455 970 (2016: 36 447 746) shares are accounted for as treasury shares in terms of IFRS and are therefore excluded from earnings per share calculations; and
  5. Assore's income tax reference number is 9045/018/84/4.

The salient dates are as follows:

Last day for trading to qualify and participate in the interim dividend Tuesday, 13 March 2018
Trading “ex dividend” commences Wednesday, 14 March 2018
Record date Friday, 16 March 2018
Dividend payment date Monday, 19 March 2018
Dates (inclusive) between which share certificates may not be dematerialised or rematerialised Wednesday, 14 March 2018 to Friday, 16 March 2018

On behalf of the board

Desmond Sacco
CE Walters
Chief Executive Officer

21 February 2018