JSE-listed resources firm, Exxaro, on Tuesday said it had been forced to write down the value of its investment in the 12 million tonnes Mayoko Iron Ore Project in the Republic of Congo.
This followed the conclusion of the Concept Study on Mayoko project which showed that Exxaro had not been successful in finalising the port and rail contracts for the project as was communicated to the market in March this year.
“The impact of this write-down will be a pre-tax write-off of an amount up to the original acquisition cost of the company’s investment in the Mayoko Project as well as the project related costs capitalised to date amounting to R5.3 billion ($502.7 million) in total,” Exxaro said.
The firm said it would energetically network with the government of the Republic of Congo regarding the future of the Mayoko Project.
Meanwhile, Exxaro is expecting net operating profit for the six months to June 2014 to sag over 20 percent than the previous comparable period.
Headline earnings, which will exclude the impact of any impairment, are expected to be in line with the R2.5 billion ($237 million) posted in the previous reporting period.
South African companies use headline earnings to measure profitability of their units. (Ventures Africa)