Gold problems hold back Minorco ambitions: Operating loss dollars 2.9m at interim stage, but chairman anticipates an upturn

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The Independent Online
MINORCO'S attempt to build an active diversified mining and minerals group continues to be dogged by the poor performance of its gold and agribusiness subsidiaries and by its failure to make substantial acquisitions.

The European arm of the giant South African De Beers-Anglo American empire made a dollars 2.9m operating loss at the interim stage. It had to rely on more than dollars 60m - exact figures are not given - of income from its dollars 1.7bn cash pile and dollars 52.6m of profits from companies in which it holds minority stakes to generate pre-tax profits of dollars 109.2m in the six months to 31 December (dollars 105.6m).

But a dollars 1.8m extraordinary charge, mainly costs of the sale of non-core businesses, compared with a dollars 9.2m extraordinary credit in the previous year, pushed earnings after tax and extraordinary items down from dollars 107.2m to dollars 99.6m.

Julian Ogilvie Thompson, Minorco's chairman, admitted the company had been hit by weak commodity prices, particularly gold.

But he insisted that its strong financial position and the efforts it had made to improve efficiency meant it would benefit from any upturn in economic activity.

Gold sales, down 15 per cent, and a gold price which ended 1992 at dollars 333 an ounce, 7 per cent below its December 1991 level, produced operating losses in the precious metals division of dollars 13.1m (dollars 4.2m profit).

Agribusiness profits are traditionally concentrated in the first six months of each year. Nevertheless, at dollars 23.2m (dollars 11.5m loss), the loss was worse than usual because of higher costs for natural gas combined with soft fertiliser prices.

On the brighter side, industrial minerals and base metals made profits of dollars 23m (dollars 0.3m) and dollars 10.4m (dollars 3.1m) respectively.

The company said the full-year figures would show an extraordinary gain of around dollars 75m resulting from the sale in March of a 38.4 per cent stake in Johnson Matthey, the precious metal refiner, by Minorco's associate Charter Consolidated. Minorco was also part-purchaser of the stake but the finance director, David Fisher, said it would not account for the gain on the element of the stake bought.

Roger Chaplin, a mining analyst with Credit Lyonnais Laing, said he was still waiting for evidence that Minorco had taken any steps towards becoming a 'hands on' operating company, its declared aim 18 months ago. 'If anything it is going backwards,' he said.

The shares closed at dollars 13.30.