[miningmx.com] – IMPALA Platinum (Implats) attempted to shrug off present woes related to labour protests and above inflation cost increases saying it hoped to raise up to $500m through convertible bonds that would secure finance for future production.
The R105bn company said in an announcement today that it would issue two convertible bonds – a dual R1.78bn ($200M) offer and a $200m offer – the proceeds of which would be pumped into continued financing of the 16, 17 and 20 shaft developments at Implats’ Rustenburg operations.
The three shafts carry a total capital expenditure tag of R25.23bn and will contribute a combined 636,500 ounces of refined platinum when they reach steady state production in 2022.
The shafts will not translate into production growth, however. Terence Goodlace, CEO of Implats since June 2012, said the group remained committed to building replacement ounces in South Africa while production growth would be through projects in Zimbabwe.
There is an option to increase the value of the South African and dollar-denominated bonds by an aggregate of $100m which would take the total that could be raised by Implats to $500m. The bonds mature in 2018. The book-building process was expected to be completed by today, said Brenda Berlin, CFO of Implats.
Simultaneously announcing its interim results ended December 31, in which taxed profit fell to R808m from R3.56bn in the corresponding term in 2011, Implats said it cash reserves had fallen to a mere R400m from R3.3bn, mostly owing to a strike in the first quarter of 2012.
Total borrowings increased R300m to R3bn which left Implats with a net borrowed position at December 2012 of R2.6bn.
MINING CONCERNS
Goodlace, a mining engineer with ground-up experience, was critical of the mining performance, especially at Impala’s Lease Area in Rustenburg of which he said: “Quite honestly, it has been woeful”.
He said there was a lack of “production discipline” and with unit cost per platinum ounce increasing about 50% at the Lease Area to R15,729/oz, the mine was unable to cover the cost of replacement capital.
Since the Lease Area comprises about 60% of Impala’s ‘managed’ platinum production, its high cost base meant that Impala Group could not cover its expansion capital currently. There would be a quality mining intervention that would help improve margins at the company, Goodlace said.
Commenting on recent reports citing Zimbabwe’s mines minister Obert Mpofu that his country had seized land owned by Zimplats, in which Implats has an 87% stake, Goodlace said he remained “in the dark” about the matter.
“We have received nothing official from the government of Zimbabwe. We still remain in the dark. We’d like to see the details,” Goodlace said. He added, however, he was sceptical of building refining capacity in Zimbabwe which Mpofu said was required of Implats and other platinum producers in Zimbabwe.
“Once there is sufficient critical mass we would like to look at a refinery [in Zimbabwe]. The critical point though is the power. Where would that come from?,” Goodlace said.
