IMPALA Platinum recorded a total of 58 Section 54 safety stoppages in the six months to December which cost the group 25,000 ounces in lost platinum production worth about R570m, but the blame sits with management and not the Department of Mineral Resources (DMR).
That’s according to acting CEO, Gerhard Potgieter, who commented: “We had four fatalities at Rustenburg section during the six months. Not all the Section 54 stoppages were justified, but a fair amount of them were”.
“While Impala remains mindful of the safety issues that have affected its operations over recent months, it continues to engage with the DMR to minimise the negative impacts of these stoppages on its safety risk profile and operational performance.”
Asked whether Implats might take legal action against the DMR over “disproportionate s54 stoppages” – as had been done by gold producers AngloGold Ashanti and Sibanye Gold – Potgieter replied: “That would be a last resort because taking your government to court results in a much more complex situation.
“We are not scared of defending ourselves if we reach an impasse with the DMR, but we have not got to that stage yet.”
Turning to the state of the platinum group metal (PGM) markets, Potgieter said platinum had experienced a fifth consecutive year of fundamental deficit in 2016 and estimated that, by the end of 2017, these deficits would have consumed about four million oz of platinum from above-ground stocks.
He told Miningmx that: “There are various estimates on the total level of those above ground stocks. The key issue is that, whatever number you started with, it is now four million oz less. The market fundamentals are positive for platinum and we believe the market finally started turning around during 2016 although we have yet to see an improvement in investor sentiment”.
Potgieter pointed out the main PGM metals had all shown gains last year with platinum ending the year 3.3% up at $907/oz; palladium up 23.5% at $676/oz, and rhodium 16.6% higher at $770/oz. That contrasted with the situation at the end of 2015 when three metals traded 28%, 31% and 41% lower respectively.
The market has responded negatively to the Implats interim numbers with the share price down more than 5% at around R46.64/share in afternoon trading on the JSE.
According to JP Morgan Cazenove, the results reflected weaker earnings and cash flow with the group reporting a headline loss of R71m compared with a headline profit of R53m in the six months to December 2015.
Goldman Sachs described the numbers as: “A negative set of results. While financials were largely in line the big negative was the cut to (production) guidance”. Both banks said they remained ‘neutral’ in their investment assessments of Implats.
