[miningmx.com] – IMPALA Platinum (Implats) posted a 10% lift in interim headline earnings, but the group passed the dividend as a strike at its Rustenburg operations presaged financial pressure in the second half of the year.
Net debt grew to R4.3bn from R2.7bn while cash and equivalents fell R800m. “We have headroom on the balance sheet, but this is not the plan,’ said Terence Goodlace who added that the last strike at Implats in 2012 “really hurt the company’, and that the current one was doing the same.
The revenue loss from the strike, staged by the Association of Mineworkers & Construction Union (AMCU), was about R1.7bn, equal to a loss of 8,000 ounces of platinum a day at a price of about R22,000 per platinum ounce.
“If it carries on much longer, I fear for the industry,’ said Goodlace commenting on the strike, now in its fifth week. “The consequences will be absolutely dire,’ he said.
Asked to clarify the potential impact, he said: “You can draw your own conclusions; you don’t even need a CEO in this position. You might as well go home’.
Another round of non-bilateral meetings between Implats and AMCU is scheduled for February 28 (tomorrow).
Goodlace added, however: “We are starting to see a little change, but nowhere near what is affordable to the industry’. It’s understood, for instance, that AMCU’s president, Joseph Mathunjwa, may be prepared to consider a productivity-linked wage increase with platinum employers.
AMCU is holding out for a R12,500 per month basic salary for employees. AMCU speaks for about 62% of Implats employees with the National Union of Mineworkers (NUM) and UASA representative of less than 10% each of company employees. About 19% of Implats’ workforce is on leave as Implats has all but shut down its mines and refineries.
Despite the closure, Goodlace said there was no immediate risk to the Rustenburg (Lease Area) production target of 850,000 ounces/year set by Goodlace when he took up leadership of Implats in 2012. The Lease Area, which still provides the bulk of Implats’ production, has serially underperformed turning out only 709,000 oz in the 2013 financial year.
“There is no risk to the 850,000 oz target; I believe this [the strike] is a short-term issue. We have got a three to six month issue, and then we would have to open up and re-develop the Rustenburg areas, and abandon areas where we would need to. This is just a hiatus,’ he said.
From a rock mechanics perspective, unattended mining panels degrade and have to be redeveloped; in some instances, they become unmineable. Goodlace said that in the Lease Area, there had been less than a 5% deterioration with a further 11% of panels in danger of serious deterioration.
“The longer we stay like that the more it might worsen. We could re-establish that in a reasonable period. But can’t guarantee how long we can halt the deterioration,’ he said.
One complicating factor is that there had been “an uptick’ in copper theft across the Rustenburg operations. “We are seeing some widespread copper theft. There is a cost to replace it. Gases also build when there’s copper theft…’ as ventilation is interrupted, he said.
Implats announced a 9.1% increase in gross refined platinum production to 786,500 oz in the interim period compared to the interim of the previous financial year.
Group unit costs were contained to a 2.2% increase to R16,310 per platinum ounce owing to the increase in production year-on-year.
The outcome was a 9,5% increase in revenue to R16.5bn as lower platinum dollar prices were offset by a weaker rand against the dollar. Gross profit fell by R700m as cost of sales increased nearly 17% owing to inflation pressure on direct operating costs, the company said.
