Infrasors transfers listing to JSE main board

By: Chanel de Bruyn

Published: 1st February 2010

JOHANNESBURG (miningweekly.com) – By moving its listing from the AltX to the JSE, infrastructure materials group Infrasors has taken the next step in its growth path to becoming a mature mining company, CEO Trevor Robinson said on Monday.

The company, which listed on the AltX in July 2007, on Monday transferred its listing to the general mining sector of the main board.

Robinson noted that the move to the main board would remove the “risk tag” associated with the AltX, as well as expose it to a stronger institutional investor base.

With a market capitalisation of about R124,5-million, Infrasors is a holding company for subsidiaries active in the mining and quarrying sector.

The subsidiaries produce aggregate stone products, aggregate slag, metallurgical grade dolomite, industrial foundry sands, sands and stone dust, silica flint, silica sands and building and construction sands, among other products.

Its market exposure was mainly to the foundry, metallurgical and construction industries, while its direct competitors were largely privately owned quarries and sand businesses.

Its closest listed rivals included JSE-listed Petmin, which supplied the glass and metallurgical industries, and Afrimat, which produced aggregates from its quarries, but both these organisations were also exposed to other markets in which Infrasors was not involved.

Robinson noted that while Infrasors had also been impacted on by the global economic slowdown, the long-term growth prospects for the company remained positive.

It had seen a good uptake in product from the construction sector in the recent past as a result of the 2010 FIFA World Cup.

While demand would slow down as a result of the infrastructural projects for the sporting event being completed, the company expected to see continued demand for its products, albeit to a lesser degree.

Further, Robinson said that demand from the foundry industry was slowly moving in a positive direction.

The company supplied 95% of foundries in Ekurhuleni with products such as metallurgical dolomite, foundry silica and glass silica.

EXPANSION

Robinson noted that the company would, in the near term, continue to focus on further improving the operational efficiency of its existing operations, while acquisitions formed part of a longer-term growth strategy.

Infrasors has committed substantial capital expenditure (capex) to increasing the production capacity of its subsidiaries over the past 30 months and would invest further capex in the months to come, he added.

It had spent R8-million to expand the plant capacity at the Lyttleton Dolomite subsidiary by an additional 30 000 t/m in the 2009 financial year, while also having approved a further R15-million in capex to expand output by another 40 000 t/m.

Financial director Marius Potgieter noted that the company was expecting further expansion of the plant to be undertaken during the second half of the 2010 financial year.

Further, Infrasors had also spent R14,4-million to expand the capacity of dry silica at the Delf Sand operation, where a fifth dryer had been installed and commissioned in the second half of the 2009 financial year to reduce costs.

The existing four dryers had also been reconditioned to ensure more efficient and cost-effective drying, as well as greater production capacity, during the 2010 financial year.

Potgieter noted that Infrasors would now invest capex on commissioning the Cullinan mine, which was adjacent to its Delf Sand operation, the Pienaarspoort mine and on an expansion of its Silica operation in the KwaZulu-Natal region.

A feasibility study for the Pienaarspoort flint silica mine had already been completed, with final bulk sampling, mine and plant design expected to start in the first half of the 2010 financial year.

Meanwhile, Robinson said that the company was also planning to establish a new Silica plant in the KwaZulu-Natal region, where it has not previously operated, in the next few months.

He explained that the group currently had customers in this region and that the new plant would allow the company to improve its operational efficiency in terms of supplying these customers with product.

Infrasors was also currently in discussion to acquire a business in the silica sand industry.