IMPALA Platinum (Implats) extended its debt facilities to R4bn in an effort to “provide comfort” it could redeem R5.5bn in convertible bonds which fall due in 2018.
The increase in debt from R3.25bn, which has also been extended to 2021 from 2017 previously, will also ease market fears that Implats may have to issue more shares to protect its balance sheet.
Analysts have expressed concerns that the world’s second largest platinum miner would have to return to the market for the second time in as many years as cash generation dried up amid a decline in the dollar platinum price.
Implats raised R4bn in a rights issue in October and said that it would invest R4.5bn over the next three years building new generation shafts at Lease Area in Rustenburg.
Analysts at BMO Capital Markets and Goldman Sachs wrote this year in separate reports that the company was expected to be free cash flow negative as platinum prices languished at below $900/oz. Platinum is currently trading at $1,091/oz.
However, Implats said that in addition to extending its debt facilities it would also meet its production guidance of 1.42 million ounces of refined platinum. This was despite a fire at its 14 Shaft in Rustenburg earlier during the financial year.
Said Implats: “Impala Platinum Holdings Limited is pleased to announce that it has extended the quantum and tenure of its existing debt facilities from certain of its local relationship banking institutions in order to further strengthen its balance sheet.
“Implats has amended R3.25bn of its existing debt facilities, which were previously available until December 2017, to a revised quantum of R4.0 billion available until 2021. All other debt facilities remain in place”.
Crucially, it said that in addition to meeting production targets it would be “… well positioned in terms of cash generation”, adding that “… The enhanced liquidity provides comfort that Implats is able to address upcoming debt maturities as well as the ongoing needs of the business”.
Implats is due to part ways with its CEO, Terence Goodlace, who announced in May that he would step down from the company after four years in December.
Before then, however, Goodlace must lead his team through wage negotiations with unions including the National Union of Mineworkers and the Association of Mineworkers & Construction Union (AMCU).
AMCU said on July 7 that it would demand a R12,500/month basic wage for entry level miners when it started new wage talks scheduled for July 12.
Shares in the company have improved nearly 110% year-to-date and are 15.55% higher in the last 30 days. The company is valued at R38.5bn.
