JOHANNESBURG (miningweekly.com) – Diversified mining giant Exxaro said on Wednesday that the pre-tax impairment of the company’s investment in the Mayoko iron-ore project, in the Republic of Congo (RoC), had been concluded, with the impairment loss amounting to R5.8-billion.

This amount included an impairment of the original acquisition cost of R2.9-billion, the carrying amount of property, plant and equipment of R1.1-billion and the project-related costs capitalised to date of R1.7-billion.

A write-down of short-term receivables amounting to R47-million was also recorded during the six months ended June 30.

“The final pre-tax impairment loss recorded is higher than the previously reported R5.4-billion, mainly owing to the impact of exchange rates on the valuation of the investment, property, plant and equipment,” the company said in a trading statement.

Mining Weekly Online reported earlier this month that, after having failed to secure a rail framework agreement and a port memorandum of understanding with the RoC government, and owing to higher-than-expected project development costs following the outcome of a revised concept study, the miner announced there would be an impairment of its investment in the project.

Exxaro said on Wednesday that it, meanwhile, expected consolidated net operating profit and attributable earnings a share for the six months ended June 30 to show a decrease of more than 20% when compared with the corresponding period of 2013.

A decrease in consolidated net operating profit for the group was also expected when compared with the R917-million net operating profit reported in the first half of the prior year, owing mainly to the nonrecurring pre-tax impairment loss related to the Mayoko project.

In contrast, the group’s coal business was expected to report a higher net operating profit for the six-month period compared with the R1.03-billion net operating profit reported in the first six months of 2013.

“This is mainly as a result of higher revenue recorded, higher shortfall income from [State-owned power utility] Eskom and lower operating costs incurred during the half-year, as well as the impairment,” Exxaro stated.

A lower contribution from the company’s equity-accounted investments was also expected for the six months, mainly as a result of a 19% decrease in earnings from subsidiary Sishen Iron Ore, which was largely attributable to lower iron-ore export prices.

Moreover, attributable losses for the first half were expected to be between R2.3-billion and R2.6-billion.

This equated to a basic attributable loss of between 668c and 745c a share, representing a decrease of between 206% and 218% when compared with that of the corresponding 2013 period.

Basic headline earnings a share, which excluded the impact of any impairment losses, were expected to be between 745c and 800c, representing an increase of between 5% and 12%.