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African Rainbow to close Nkomati nickel JV, FY'19 earnings up YOY

Diversified South African miner African Rainbow Minerals Ltd. on Aug. 30 posted a 9% yearly rise in fiscal 2019 headline earnings to 5.23 billion rand, or 27.18 rand per share, as solid prices from iron ore, palladium and rhodium offset decreases in platinum, nickel and thermal coal prices.

The company declared a final dividend of 9 rand per share, boosting the total payout for the year ended June 30 to 13 rand per share from 10 rand per share the previous year. EBITDA rose 16% year on year to 9.34 billion rand, with revenue rising 5% to 9.60 billion rand.

The company plans to ramp down and eventually close its loss-making Nkomati nickel mine, a joint venture with PJSC Norilsk Nickel Co., which has also become subject of a legal challenge between the Russian mining company and the Botswana government. It will place the mine on care and maintenance in September 2020 ahead of closing it.

ARM CEO Mike Schmidt said the Nkomati had been bleeding cash for three years. Speaking to CNBC Africa on Aug. 30, Schmidt said the mine had low-grade nickel and only six years of life remaining, as well as that the mine would have to be closed if they hoped to increase productivity and get earnings back up.

Nkomati reported a headline loss of 315 million rand impacted by an increase in unit production costs and a 130 million rand negative mark-to-market adjustment as the nickel prices fell.

ARM's iron ore division delivered a 103% increase in headline earnings to 3.40 billion rand. But the profit from its manganese division fell by 15% while falling 73% for the platinum segment due to lower sales.

Two Rivers, which ARM said had contributed to its profits along with the iron ore division, delivered a 5% increase in headline earnings thanks to a higher rand PGM basket price which was partially offset by lower sales volumes. Initiatives to improve the PGM volumes at the mine are being considered, including installing additional milling capacity.