Afarak Group PLC (LON:AFRK) has told investors it will issue new equity as part of transactions to increase its ownership stake in a number of South African mining assets.
In total, the company will be issuing 2.12mln new shares. They can be issued within existing shareholder authorisations and the agreements are not expected to have any major impact on Afarak or its business.
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“Due to the relevantly modest size of the transactions and the fact that the company is increasing its ownership in assets that it already controls, the company is not expecting the transactions to affect the financial performance of the group in 2019,” Afarak said in a statement.
Earlier this month, the company released financial results for the first quarter which confirmed the negative impacts amid weak ferrochrome markets. The company noted the lower ferrochrome prices and lower sales volumes. It reported €41.3mln of revenue, down 17% from €50.2mln in the comparative quarter of last year.
First quarter underlying earnings (EBITDA) came in at a €4.8mln loss versus a €0.7mln loss a year earlier and it reported a €7.5mln loss, expanded from €1.9mln. There was a €4.1mln outflow of cash in the period. It ended the quarter with €10.1mln of cash and equivalents.
Chief executive Guy Konsbruck, at that time, said: “The operational challenges in our South African operations seen in 2018, persisted into the new year.
“Following the implementation of a turnaround strategy, positive results started being achieved in our South African mines towards the end of the first quarter. In addition, cash management was a key priority for the company during the quarter. Despite the results, prudent working capital management have allowed the company to keep cash flow stable.”