Miner ENRC ‘remains committed to full independent board’

ENRC, whose image has been tarnished by the purchase of an asset the Congolese government expropriated from Canadian miner First Quantum last year and a very public boardroom spat, announced a three-month corporate governance review in June.

While investors hoping for substantial news about the review alongside first-half earnings were disappointed, London-listed ENRC sought to reassure.

“We are on target and some time in mid-September we will come out with the full review and the full results of the review,” chief executive Felix Vulis said. “(We are) committed to a full independent board, I can assure you of that.”

Strong iron ore prices helped lift headline core first-half profit a third, but ENRC was also hit by a 30 per cent jump in costs and cautioned it saw cost pressures continuing as it developed projects in Africa and Brazil.

It said there was no sign of cost pressures easing in the second half and also warned of volatile prices ahead, adding it was too soon to assess the impact of recent market turbulence on demand for key commodities.

“We hesitate to be overly bullish but the chrome industry needs a price increase and we are still optimistic,” chief commercial officer Jim Cochrane said.

“All in all, consumption will shake off this nervousness, but generally the risk that any uptick will be delayed is greater now than it was a couple of weeks ago.”

“There was no news on the outcome of the governance review which to our minds has been the key share price catalyst of late and we do not expect a sharp recovery in the underperforming shares until this is resolved,” analysts at Liberum said in a note. “Nevertheless, the underlying valuation looks compelling.”

First-half underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose a third to $1.93bn, on the back of a 32 per cent rise in sales and stable margins. Operating profit rose 35 per cent to $1.67bn.

ENRC said it expected progress in its financial performance to continue into the second half but at a slower rate than the first six months of the year.