[miningmx.com] – ANGLO American Platinum (Amplats) extended its divestment plans to the Pandora joint venture with Lonmin and also said it may end its partnership with Atlatsa Resources.
Commenting in the group’s interim results today, Amplats CEO, Chris Griffith, confirmed there were plans to divest of its Rustenburg assets that had been embroiled in a five-and-a-half month strike this year at a cost of some 400,000 ounces of equivalent refined platinum production.
The group had last year announced it planned to sell its Union mine and its concentrators as part of a heavy restructuring which, at the time, was meant to lift the profitability of the Rustenburg assets.
Griffith said the group had decided to prioritise its capital spend on its Mogalakwena, Unki, Twickenham, Amandelbult and joint venture assets: Mototolo, Modikwa, Kroondal and BRPM.
As a result Rustenburg and Pandora joint venture “… will be better placed in the hands of new owners who would be able to provide the focus and capital for the operations to have a successful future,” he said.
“We are assessing our Bokoni joint venture asset, and will make a further announcement on this in due course,” he said. Bokoni Mines is a black economic empowerment company owned by Atlatsa Resources that Amplats has recapitalised three times since its creation in 2007.
Responding to media questions in a morning conference call, Griffith added that Amplats was perhaps “not the best partner” for Atlatsa. “We are not good partners for Atlatsa going forward to invest additional capital in that project,” he said, adding that the group had “higher margin assets” in which to invest.
Bokoni increased equivalent refined production to 50,000 oz during the six months, an increase year-on-year of 17%.
A potential complication, however, is the South African government’s interpretation of empowerment laws. Atlatsa is black-owned and provides an important empowerment credit to Amplats which it risks losing if it sells the asset.
Said Griffith: “Atlatsa is BEE credit. How that would pan out would be a consideration [in concluding the deal]. It is an important part of our empowerment so have to work through it,” he added.
Griffith said that negotiations with the government about the sale had been smooth as there was recognition from the Department of Mineral Resources that the company was not abandoning South Africa.
“We still have a growth agenda,” said Griffith. “Our investment could be between R70bn to R100bn over next 10 years,” he added.
The National Union of Mineworkers (NUM) was unhappy with the proposed asset sales saying it was “shocked” by the announcement. “Any sale is going to result in job losses and this is punishment for poor workers,” said NUM’s general-secretary Frans Baleni.
“We continue to make that appeal for workers to reject divisions and stay united to defend jobs,” said Baleni in a statement.
The strike Amplats suffered, waged by the Association of Mineworkers & Construction Union (AMCU), cost the South African platinum sector and employees a combined R31bn and is likely to lead to similar restructuring plans at the affected assets of Impala Platinum and Lonmin.
Amplats, however, has a broader portfolio of assets than its peers and was also able to draw on some 300,000 ounces of inventory which meant that full-year sales volumes were only likely to be 100,000 oz less than guided at some two million ounces.
Full productive capacity at the Rustenburg assets was only likely in the fourth quarter of this year, however, owing the gradual ramp-up required.
Equivalent refined platinum production for the first half of the 2014 financial year was 715,000 oz, a 39% decline year-on-year.
“The dominant feature of the first half was the strike during which 40% of our production was not in operation,” said Griffith.
“However, we were able to ensure security of supply to our customers throughout the period, and those operations unaffected by the strike showed stable and improved performances,” he said.
Amplats posted R157m in headline earnings, a hefty decline from earnings of R1.3bn at the half-year point in the 2013 financial year. Bongani Nqwababa, Amplats CFO, said the group’s balance sheet remained strong, however.
“Debt is unlikely to increase materially from current levels,: Nqwababa said. “We have facilities of R22bn and we are well below that,” he added. Net debt as of June 30 was R12.4bn, a R90m increase year-on-year. Gross debt to equity declined to 23.8% from 25.2% in the previous financial year.
