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Kumba Iron's H1'16 profit up YOY; new CEO appointed

Anglo AmericanPlc unit Kumba IronOre Ltd. said July 26 that it has booked a profit attributable toowners in the first half of 2.97 billion South African rand, or 9.27 rand pershare, higher than the 2.51billion rand, or 7.82 rand per share, recorded in the same periodin 2015.

EPS was within guidance of between 8.85 rand to 9.55 rand.

Profit increased despite revenue sliding year on year to17.57 billion rand from 19.95 billion rand as savings from operating expensespartially offset lower revenues. Operating expenses had fallen 13% to 12.41billion rand from 14.32 billion rand during the six-month period.

Kumba Iron said the improvement in iron ore prices over thepast six months from the low of US$38.50 per tonne in December 2015 and its 3.1billion rand savings in controllable costs have allowed it to generate strongoperating free cash flow, which was up 18% to 6.7 billion rand.

This supported the company's substantial debt reduction, toa net cash position of 548 million rand from a net debt position of in end-2015.

CapEx fell to 1.46 billion rand from 3.33 billion rand, justover half of the company's lower end guidance of 2.9 billion rand to 3.1billion rand for this year.

On the production side, the South Africa-focused miner'siron ore output fell 21% to 17.8 million tonnes. This was due to theplanned reduction in production at Sishen mine, which produced 11.5 million tonnes,continued strong performance at Kolomelaof 5.9 million tonnes, with the 370,000-tonne balance made up by .

Total sales were 22% lower at 20.2 million tonnes, as exportsales volumes slipped 22% to 18.1 million tonnes while domestic sales dropped24% to 2.1 million tonnes.

Kumba Iron also said that Themba Mkhwanazi, the CEO of AngloAmerican Coal South Africa, will take the reins as the company's chiefexecutive, effective Sept. 1.

Mkhwanazi replaces Norman Mbazima, who stepped down from therole to focus on his role as deputy chairman of Anglo American South Africa.

July Ndlovu, the executive head of processing operations atAnglo American Platinum, replaces Mkhwanazi as chief executive of AngloAmerican Coal South Africa, Anglo American said in a separate same-daystatement.