COMPANIES
Sallies soars as it fires Honeywell
Posted Mon, 23 Jan 2006
Shares in fluorspar miner Sallies rallied on Friday as it terminated its supply agreement with Honeywell, after the chemicals producer had failed to make overdue payments and remedy other material contract breaches.
Sallies said Honeywell has consumed more than half of its annual output for the past five years at prices well below the market rate — the supply agreement was officially defined as “onerous” in terms of South African Generally Accepted Accounting Practice (GAAP) last year — and the cancellation of the contract will free up this production for sale at more favourable rates.
Sallies chief executive Izak Marais noted that Honeywell believed the agreement capped the price at $116/ton while the current spot price was around $170/ton.
The company added that with other buyers readily available in the buoyant international fluorspar market, the termination of supplies to Honeywell would therefore have an immediately beneficial impact on the company’s
revenue.
Sallies has been struggling in recent times against the combined effect of the Honeywell burden and the strong rand, posting a loss of R31-million for the financial year to June 2005.
Shares in Sallies surged 11.36 percent to 49 cents on the JSE on Friday.
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