Kumba updates full year 2021 guidance and outlook for 2022 to 2024

Back to 2021

10 December, 2021

Kumba is providing an update to investors and analysts on the Company's full year 2021 guidance and the outlook on production for 2022 to 2024 and C1 unit costs for 2022.

Themba Mkhwanazi, Chief Executive of Kumba said: "Kumba continues to prioritise the safety, health and well-being of our workforce and communities. Over 70% of our workforce have been fully vaccinated and we are supporting the vaccination effort amongst employee family members and our local communities.

"Following the completion of the annual maintenance programme in October, operational performance has ramped up to planned levels. Production and sales are expected to remain in line with our full year 2021 guidance of c.40.5Mt and c.39.5Mt, respectively.

"Across many industries including mining, we continue to see the repercussions of the Covid-19 pandemic, including supply chain disruptions and rising input costs. Consequently, Sishen's unit cost is at the upper end of our guidance of R430 and R440/t, while Kolomela's unit cost has increased to between R320 and R330/t (from R305 to R315/t). The Kumba C1 unit cost guidance for production of US$40/t is unchanged.

"Our production performance in 2021 is expected to be 7% higher than that in 2020, demonstrating our operational resilience and ability to manage through external challenges. We continue to focus on cost performance and ensuring that we are well set up to deliver on our priorities for 2022.

Production guidance for 2022 and 2023 has been revised to 39-41Mt (from 41.5-42.5Mt). In 2022, Transnet's stacker reclaimer refurbishment programme at the Saldanha Port will impact port capacity and, consequently, our value chain. In 2023, production is expected to be impacted by the tie-in of the Sishen ultra-high-dense-media separation plant. In line with our strategy, the UHDMS technology will extend the Sishen life-of-mine and further improve the quality and carbon reduction properties of our product in the steelmaking process, thereby optimising the value of our product."

Full year 2021 guidance	FY2021(dmt)	FY2021 Revised (dmt)	FY2021 (wmt)
Export sales (Mt)	~39	No change	~39.5
Total production (Mt)	~40	No change	~40.5
Sishen	~27.5	No change	~28
Kolomela	~12.5	No change	~12.5
Waste stripping (Mt)	205 - 225	No change	N/A
Sishen	150 - 160	No change	N/A
Kolomela	55 - 65	No change	N/A
On mine unit cost (R/t)
Sishen	430 - 440	No change	N/A
Kolomela	305 - 315	320 - 330	N/A
C1 unit costs (US$/t)			40
Capital expenditure (Rm)	7 700 - 8 200	7 100 - 7 500	N/A

Total production (Mt) 2022 - 2024 guidance
2022F: 39-41 (previously 41.5-42.5)
2023F: 39-41 (previously 41.5-42.5)
2024F: 41-43 (new guidance)

C1 unit cost (FOB US$/t) 2022 guidance:
2022F: ~41 (new guidance):

Production,sales volumes and C1 unit costs are reported as wet metric tonnes, and the previous guidance has been restated as Kumba previously reported on a dry basis. Product is shipped with a moisture content of approximately 1.6%. Volumes referred to for the period are 100% of Sishen Iron Ore Company Proprietary Limited ("SIOC"), and attributable to Kumba's shareholders and the non-controlling interests in SIOC.

This announcement contains forward-looking statements which are based on the Company's current beliefs and expectations about future events. The operational and financial information provided in this announcement are estimates and subject to potential Covid-19, logistics and weather disruptions and have not been reviewed and reported on by the Company's external auditors.

Kumba production and sales report for the fourth quarter and year ended 31 December 2021, will be released on the Johannesburg Stock Exchange News Service ("SENS") on 27 January 2022.

Centurion
10 December 2021

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RAND MERCHANT BANK (A division of FirstRand Bank Limited)