Anglo American Platinum (Amplats) plunged into heavy losses during the first half of 2017 as the group was clobbered by impairments related to its on-going restructuring programme, and the impact of the low rand platinum basket price which was worsened by the strengthening rand.
In addition to recent impairments from the disposal of the group’s Union Section, the outlook would be affected by platinum market moving into a “modest surplus” in 2017, said Amplats CEO, Chris Griffith. He also expects the rand platinum basket price received by the group to stay “subdued in the near term.”
Amplats reported an average basket price of R24,400/oz of platinum metal sold in the six months to end-June (previous comparable period – R25,100/oz) which Griffith described as the weakest rand basket price received since 2013. He added Amplats’ unit cost guidance remained unchanged for the year at between R20,350 and R20,850 per platinum ounce.
Amplats’ operating profit plunged 78% to R684m (R3bn) but on top of that came a string of impairment charges with the end-result being that the group reported a loss for the six months of R1.5bn (R1.5bn profit) equivalent to a loss in basic earnings a share of 453c (588c a share profit).
Headline earnings remained positive at 285c a share (629c a share).
The group took a R1.5bn loss on impairment and scrapping of property, plant and equipment and then a further R997m impairment against “investments in associates” most of which related to Amplats’ stake in Royal Bafokeng Platinum’s Bafokeng Rasimone mine.
Still to come is the full impact of the disposal of the Union Mine on which Amplats expects to incur an overall attributable, post-tax loss of between R1.5bn and R1.9bn. Griffith pointed out that “this loss has been recognized in part by way of an impairment recognized in the financial results to June 30, 2017.”
Griffith said platinum production for the year to end-December 2017 is expected to remain within guidance of 2.35m to 2.4m ounces with refined production higher in the second half as a result of refining the build-up of work-in-progress inventory of 65,000oz from the smelter run-out in the fourth quarter of 2016. Refined platinum production guidance is 2.45m to 2.5m ounces for 2017.
He added the disposal processes for the exit from Union, Pandora and the long-dated Amandelbult resources would continue and are expected to be completed in the second half of 2017 “subject to the timing of the relevant Department of Mineral Resources approvals”.
