Chrometco Limited was founded in 2003 as a chrome explorer and miner, and has diversified into platinum group metals (PGMs) and other bulk commodities. The company has one asset, the Rooderand chrome mine, where it has both chrome and PGM rights, complete with exploration data.

Apart from mining, fields of interest include concentrating and beneficiating metals and ores, particularly chrome, platinum, nickel, copper, manganese and cobalt. The company also focuses on investigating business development opportunities.

Today, Rooderand boasts a chrome resource of 60 million tonnes and a stockpile of 70 000 tonnes. Production was deliberately curtailed in 2012 to weather the global decline of chrome demand and chrome prices. The company has however reported heavy losses recently as South Africa’s mining sector continues to struggle.

Chrometco shares have been available to buy on the Johannesburg Stock Exchange (JSE) since 2005, but a history of solid growth in Chrometco share price has been reversed due to difficult trade conditions.

Chrometco has had to weather a struggling economy, beleaguered mining sector and weak chrome prices, which resulted in a loss of R31 million for the 2016 financial year, compared to a loss of R18 million the year before.

Mining was further hampered by structural faulting at Rooderand, which forced the company to stop ore production to focus on exploration and an updated mining plan. The forecast is that ore produced for sale will remain intermittent as the company focuses on these activities.

In 2013, Chrometco entered into an agreement with Realm Resources and Nkwe Platinum to buy prospecting rights for PGMs and the remainder portion of Rooderand. This process was finally concluded at the end of 2015 and has resulted in the addition of 4.5 million ounces of PGMs to the group’s mineral resource portfolio. The board expects that this will give the group a solid foothold in the PGM space, and there are plans to buy into co-occurence of chrome and PGMs, and the synergies between the two, to build a profitable mining venture.

The company says that a number of cash-generative projects are under consideration, but warns that the ability to fund operations in future will largely depend on attracting alternative sources of funding. Sensible joint ventures and possibly disposing assets at the right price, have also been factored into the group’s performance strategy.

The live online stocks chart showed that Chrometco share price reached the lowest point in the company’s history in 2016, standing at R7 per share. The stocks offer a low-cost buy for investors, but there is no certainty that Chrometco share price will recover.

The board of directors has voiced optimism about the forecast for the company, and has assured investors that Chrometco is well-placed to weather current market conditions, has a comfortable capital base and no debt. Currently, however, Chrometco shares are not a particularly tempting purchase.

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Metals & Mining

Mining Services

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