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Implats jolts market with downgrade Posted: Wed, 14 Jun 2006 [miningmx.com] -- IMPALA Platinum (Implats) shares dipped briefly June 14 in trade on the JSE following the release of a production update and fell to R900/share at one stage before bouncing back swiftly to close at R963/share. The share has retreated 33% over the last month since setting an all-time high of R1,435 on May 11. The decline is part of the current general correction in gold and platinum share prices caused by investor uncertainty over the state of emerging market economies and further possible interest rate increases in the US. According to Implats’ financial director, David Brown, the update is intended to correct market expectations that the group’s headline earnings for the year to June will exceed the 20% to 30% rise predicted by management in February. The reason for the analysts upping their forecasts is the rise in the dollar price of platinum and other important by-product metals such as palladium and rhodium in the second half of Implat’s financial year. Revenues have also been boosted by the decline in the value of the rand against the US dollar over the past month. For the six months to end-December, Implats reported average prices received of $911/oz of platinum; $207/oz for palladium, and $2,260 for rhodium. Since then the platinum price has soared as high as $1,330/oz and currently sits at $1,140/oz while palladium hit $400/oz before pulling back to current levels around $285/oz and rhodium shot up to $6,275/oz before retreating to the current price of $4,450. Brown says the rise in earnings will remain at the forecast 20% to 30% level because metal production is lower than expected. Output from the Impala lease area near Rustenburg - which provides the bulk of the group’s production - will still be at a record level above the 1.1 million ounces produced in the year to June 2005 but it’s not going to be as high as management had anticipated. The reasons Implats supplies are the lower grade, slower improvements in mining efficiencies, and three lost production shifts because of national stayaways organised by COSATU (Congress of South African Trade Unions). Brown says the issue on mining efficiences reflects teething problems with the new drill rig system being introduced into the mines. The update also notes that receipts by Impala Refining Services - which toll-treats material from third party contributors - were lower than expected. Brown says this reflects lower production from Aquarius Platinum’s Marikana mine.Free news alerts: click here to subscribe
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