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Afrimat business update and pre-close briefing session
AFRIMAT LIMITED
Incorporated in the Republic of South Africa
(Registration number: 2006/022534/06)
Share code: AFT
ISIN: ZAE000086302
("Afrimat" or "the Company" or "the Group")
AFRIMAT BUSINESS UPDATE AND PRE-CLOSE BRIEFING SESSION
Background
The 2025 financial year ("FY2025") was a difficult year for Afrimat, resulting in a decrease in
base returns that shareholders had been accustomed to. The first quarter ("Q1") of the 2026
financial year ("FY2026") was a continuation of the previous year, but by the second quarter
("Q2"), the Group noted improvements across several key areas.
These included:
• Operational improvements at Nkomati were achieved
• Significant increase in local iron ore sales volumes
• International iron ore sales were satisfactory
• Marked improvement in aggregate sales volumes, together with further value unlock
across the aggregate's businesses
• Preferred bidder, for quarries that are required to be sold, has received financial
approval from financiers
• All Holcim information systems successfully migrated onto the Afrimat system,
resulting in substantial monthly cost savings
The focus for the past eight months has been to ensure that Afrimat remains strategically
positioned. Our diversified model ensures the correct deployment of resources across
operations to make certain that our execution continues to underpin the long-term strategy
and sustainability of the business.
In our 19-year history, Afrimat has never experienced a significant permanent loss of capital.
After each acquisition, we allowed time to stabilise distressed assets, and although our earlier
acquisitions were smaller, less complex, and easier to turn around, our more recent
acquisitions have been larger and more multifaceted. However, we are confident that these
later acquisitions have contributed to our diversified structure, and despite past challenges,
we are now beginning to see a steady turnaround.
We remain focused on generating cash to support debt repayment. The debt:equity position
has not changed significantly since FY2025.
Construction Materials
Aggregates
Our strategic objective in acquiring Lafarge was to get access to the quarries, which are
excellent, well-located assets. Unfortunately, the quarries had been neglected and required a
significant investment of both time and capital to bring them back to production. The
information systems and management structures are now integrated into Afrimat's systems.
Through precise data collection and processing, we enhanced the operational efficiency of the
quarries in Q2, resulting in improved profitability. We have also regained market share
previously lost, simply by providing better service and ensuring product availability for our
customers.
Afrimat's diversified operations, its acquisition of Lafarge South Africa, and the fact that 50%
of the Transnet-approved quarries are owned by Afrimat, ensure that Afrimat is well-positioned
to support Transnet's infrastructure development and maintenance across all six major rail
corridors. Afrimat can play a key role in these strategic national projects by supplying critical
construction materials and leveraging its national footprint.
Volumes in Q1 remained stable, with increased demand evident in Q2.
Cement and extenders
Afrimat continues to evolve its cement strategy, aligning with global sustainability trends and
operational efficiency. We believe the traditional cement model is no longer viable in today's
market. By reducing reliance on costly and environmentally taxing components and
incorporating extenders such as fly ash and slag, both abundantly available to Afrimat, we can
supply compliant, cost-effective, and lower-carbon cement products to the market.
Significant capital investments have been made at the Lichtenburg cement factory to address
historical underinvestment. While major infrastructure upgrades are complete, minor
operational inefficiencies remain, contributing to intermittent downtime. To address this, we
have deployed five dedicated mechanical and electrical engineers to the site, focusing on
enhancing plant reliability and reducing production interruptions.
Demand for Afrimat's cement products remains strong, with stable and rising bulk and bagged
cement sales. July 2025 marked the highest monthly sales since taking over the business.
The only constraint to further growth is the reliability of the kilns, which is being actively
addressed through engineering interventions.
Afrimat's fly ash business is delivering strong volume and profitability growth, following the
successful completion of several key projects. Notably, like cement, July 2025 marked the
highest volume month since acquiring the business. We are confident in our ability to build on
this momentum in the second half of the year, supported by robust demand and improved
operational capacity.
Bulk Commodities
Iron ore – domestic
A substantial improvement in volumes sold was attained (31 August 2024 volumes: 339,648).
We expect this volume increase to be stable for the remainder of the year. The bulk of the
supply goes to AMSA's Vanderbijlpark Flats business. If the AMSA Longs business in
Newcastle shuts down, Afrimat will remain largely unaffected.
Iron ore – international
Total export volumes are expected to increase compared to the previous comparable period
(31 August 2024 volumes: 349,084), but the expectation is that the full year volumes will be
similar to the previous year, roughly 16% below Afrimat's yearly allocation of 870,000 tpa. Like
other market commentators, Afrimat agrees that Transnet has stopped the decline in logistics
availability on the Saldanha export line. The Salene deposit, adjacent to the Jenkins mine, has
been purchased and paid for. This deposit maintains Afrimat's life-of-mine asset base and
gives us the ability to efficiently blend products to maintain a high-quality end product, thus
maximising returns.
Anthracite – domestic
Operational improvements at Nkomati have proven successful. The full EIA is now in place.
The underground mining operation has been mothballed until a viable route forward can be
found, which is more cost-effective and safer. An additional viable open pit has been
discovered, bringing the total to three, providing sufficient backup and mineable resources to
meet demand. Due to decreased demand from ferrochrome smelters, volumes are expected
to decrease between 10% and 15% during the period (31 August 2024 volumes: 155,686).
Anthracite – international
The Mozambique border has reopened, and two shipments were exported (31 August 2024
volumes: 41,568), with additional shipments expected for the remainder of the financial year.
Prospects
Looking forward, our focus remains on eliminating operating losses in the cement operation
and unlocking the potential we recognise is present. We will continue differentiating the
cement business through the expansion of the cement extender and innovative cement
products. A detailed strategic review of the kiln performance is taking place.
In the aggregates business, we will continue the focus on improving the quarry margins.
Afrimat anticipates domestic iron ore sales to be slightly lower across the second half of the
financial year, if Newcastle closes. International iron ore sales are expected to remain similar
to the previous year.
Within anthracite, the focus remains on increasing exports and keeping local take-off as
consistent as possible. However, local sales are uncertain given the closure of ferrochrome
smelters in South Africa.
It is not tariffs from America that will count against us, but rather the lack of protection,
infrastructure investment, and maintenance that is putting immense pressure on our
customers. We will continue to support our customers while also exploring alternative markets.
This is a strength of our Business Development team, as they work closely with the businesses
to find alternative routes to markets, whether in South Africa or elsewhere.
Pre-close briefing session
Afrimat shareholders are advised that the Company will host a pre-close briefing session
relating to its business activities for the period ended 31 August 2025 via a virtual discussion
from 11:00 to 12:00 on Friday, 29 August 2025.
Shareholders interested in attending the briefing session should contact Keyter Rech Investor
Solutions at antoinette@kris.co.za for the link. A recording of the session can be requested by
contacting Keyter Rech Investor Solutions at the abovementioned email address.
Further update
Afrimat will update the market in September 2025 once management has greater certainty on
the financial position.
This announcement contains forward-looking statements based on the Group's current beliefs
and expectations of future events. The financial information contained in this announcement
has not been reviewed by the Group's external auditors.
Cape Town
27 August 2025
Sponsor
Valeo Capital (Pty) Ltd
Date: 27-08-2025 09:00:00
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