Kumba Iron Ore has released its second quarter production and sales report. Kumba holds a current market cap of R110 billion, with a PE ratio of 7.11 and dividend yield of 11.7%. Kumba’s share price has decreased by just under 27% over the last year.
Overview of results:
- Total production increased by 2% compared to Q2 2013 and by 1% compared to the previous quarter to 11.5 Mt, as Kolomela mine’s production was 14% higher than Q2 2013 and 17% higher than the previous quarter.
- Export sales volumes increased by 1% compared to Q2 2013 and by 9% compared to the previous quarter to 10.3 Mt.
- Domestic sales volumes increased by 21% compared to Q2 2013 to 1.4 Mt due to increased off-take by ArcelorMittal South Africa Limited (“ArcelorMittal S.A.”).
Sishen’s pit continued to be mined according to the production recovery plan during the quarter. The mine’s production was 8.3 Mt for the quarter, a decrease of 3% compared to Q2 2013 and 4% compared to the previous quarter. Sishen mine remains on track to produce ~35 Mt in 2014.
Unseasonal rainfall during May 2014 slightly hampered waste pre-stripping operations. Waste removal, however, increased by 8% compared to Q2 2013 and by 24% compared to the previous quarter. Waste mining plans for the second half of the year were completed and are being executed, which includes continuous ramp-up and fleet efficiency improvements, to recover the waste shortfall.
Kolomela mine continued to perform strongly, producing 2.9 Mt for the quarter, and is on track to produce ~10 Mt in 2014.
Production at Thabazimbi mine increased by 36% compared to Q2 2013 and by 15% compared to the previous quarter to 0.2 Mt.
Export sales volumes increased by 1% compared to Q2 2013 and by 9% compared to the previous quarter to 10.3 Mt.
Domestic sales volumes of 1.4 Mt increased by 21% compared to Q2 2013 due to increased off-take by ArcelorMittal S.A., but decreased by 3% compared to the previous quarter.
Total finished product stocks were 3.6 Mt as at 30 June 2014, 30 June 2013 and 31 March 2014.
