🕐03.04.14 - 10:00 Uhr

INVESTEC: AFRICAN MINERALS LTD : ACHIEVING 20MTA BUT NOT YET AT STEADY STATE - BUY




African Minerals Ltd (Price: 157p | Target: Under Review | Rec: Buy) African Minerals’ FY13A financial results reflected a company that is still some way from steady state, but one that now looks capable of achieving the 20mtpa production rate first promised for the end of 2012.

It generated free cash flow of $14m, but net cash outflow was $494m (incorporating capex and working capital) leaving it with debt of $836m and cash of $362m ($305m restricted for PhII).

While it can still progress with PhII, completion of the Tewoo transaction would clearly provide considerable comfort. * The company delivered sales of $869m (Investec: $825m, BB consensus: $865m) and EBITDA of $203m, below both Investec ($248m) and consensus ($217m).

Full-year cash costs were $44/t, up from the $43/t in 1H13A. * African Minerals ended 2013 at a run-rate of 19.2mtpa and has kept the momentum into 2014, producing 5.3mt and shipping 4.6mt in Q1.

While this is pleasing, if AMI is going to achieve 20mtpa it needs to deliver at even higher rates given that this is the dry season.

We had been forecasting FY14E sales of 18mt at $34/t cash costs and we are now at the high end of the company’s revised guidance for FY14E (16-18mt of sales at C1 cash costs of $34-36/t).

We are likely to adjust our numbers to err on the side of caution. * The company is still progressing the infrastructure build to 25mtpa in the near term for “relatively little capital” requirement.

Tewoo is continuing due diligence with respect to its $990m investment (it has been six months since the announcement). * The results briefing is at 9am.

Our target price for African Minerals is based on a risked NPV, assuming a maximum production rate for Tonkolili of 24mtpa, including a PhII expansion.

Key risks are the iron ore price, delivering on preliminary targets and securing funding to enable future growth.

We maintain our Buy rating.

Our target price and forecasts are under review.
To access the full note please click here Analyst: Hunter Hillcoat +44 (0)20 7597 5182
To UNSUBSCRIBE from this email and/or to change your mailing list preferences, please email .
IMPORTANT NOTICE: This communication forms part of an electronic communication sent to the intended recipient (or such persons authorised representative) for their sole use and is subject to important legal and regulatory restrictions, qualifications and disclaimers that may be accessed and read in the attached research publication.

If you cannot access the disclaimer, please obtain a copy thereof from us by sending an e-mail to in the case of SA or in the case of the UK or Australia: The disclaimer is deemed to form part of this communication.

In the event of a conflict between the disclaimer and this notice, the disclaimer shall take precedence.

This communication is confidential for the information of the addressee only (and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, unless permitted pursuant to and in accordance with the disclaimer. If you are not the intended recipient of this e-mail, then: (a) please notify the sender of this e-mail immediately by return e-mail, facsimile or telephone and delete this message from your system; (b) you may not print, store, forward or copy this message or any part thereof or disclose or cause information in this message to be disclosed to any other person. Nothing in this message constitutes an offer, warranty or representation from us.

None of our employees or representatives are permitted to send unsolicited messages ("spam") and our company cannot be held liable therefore.

If you regard this message as spam, please inform us immediately by sending an e-mail to in the case of SA or in the case of the UK or Australia: Unless otherwise agreed: (a) We are only deemed to have received an e-mail once we have confirmed receipt thereof to you; (b) We are deemed to have sent an e-mail once reflected as “sent” on our e-mail server. If this message contains offensive, derogatory or defamatory statements or materials, it means the message has been sent outside the sender’s scope of employment with us and only the sender can be held liable in his/her personal capacity.

Our corporate information and names of our office bearers can be accessed by sending an e-mail to in the case of SA or in the case of the UK or Australia: The disclaimer applies to our original message, any attachments and all subsequent messages or attachments we may send.
_____________________________________________________________________ Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales (No.

489604).

Registered office at 2 Gresham St, London EC2V 7QP. Investec Asset Finance plc is authorised and regulated by the Financial Conduct Authority for credit-related regulated activities (including hiring).

Investec Asset Finance plc is also an appointed representative of Investec Bank plc for the purposes of insurance mediation activities.

Registered in England and Wales (No.

2179313).

Registered office at Reading International Business Park, Reading RG2 6AA. We may monitor e-mail traffic data and the content of email.

Calls may be monitored and recorded. This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed.

If you have received this email in error please notify the sender.

This e-mail is subject to terms available at the following link: www.investec.co.uk/emaildisclaimer.

By communicating electronically with us, you consent to these terms. _____________________________________________________________________ _____________________________________________________________________ This email has been scanned by the Symantec Email Security.cloud service. For more information please visit http://www.symanteccloud.com Private & Confidential / Disclaimer: This document is private and confidential and remains the property of Bell Pottinger.

Its contents may not be copied, forwarded or duplicated in any form or by any means without the permission of Bell Pottinger.

Bell Pottinger is made up of Bell Pottinger Private Limited, a limited company registered in England & Wales with registered number 08024999 and Bell Pottinger LLP, a limited liability partnership registered in England & Wales with registered number OC380478, together with their subsidiaries.

Our registered office is at 6th Floor, Holborn Gate, London WC1V 7QD.

A list of the members of Bell Pottinger LLP is open for inspection at our registered office.






Products & Services | Jobs