[miningmx.com] – ROYAL Bafokeng Platinum (RB Plats) said it may not
tap shareholders for funds to complete the R11.8bn, first-phase Styldrift project
that is intended to double RB Plats’ production to about 600,000 oz/year.
In terms of its initial financing plan, RB Plats guided that some R1.7bn of its R7.9bn
or 67% share of the Styldrift project would be financed through equity. The balance of
the project is owned by Anglo American Platinum (Amplats).
However, RB Plats raised R1bn in equity following its listing last year and has lopped
an additional R1bn off the project’s total capital cost, of which R670m would have
been for RB Plats’ account in accordance with its project shareholding.
About R323m had been saved in the project to date, with some R1.88bn committed
on the project to date.
“We’d really be keen not to go to the market,’ said Martin Prinsloo, CFO of RB Plats,
although he concedes there are still some risks in the funding plan.
Some 50% of the project would be financed from cash generated by RB Plats’ main
operating asset – the 280,000 oz/year BRPM mine. However, if the platinum
group metal (PGM) market fails to improve in the second half of the current financial
year, it might affect the likelihood of cash flow funding part of the project.
“The funding plan is still viable, but it is based on a recovery in the global
environment,’ said Prinsloo. “If conditions stay the same, it might impact on the
funding plan.’
In the event the basket price for PGMs does not improve for RB Plats this year, it was
possible to increase the debt:equity of the project to about 25% from the current
20% planned, he explained.
Shares in RB Plats had gained 1% to R60.80/share on the JSE by midday. The share
has traded as high as R70/share over a 52-week range.
Commenting on market demand for PGMs, RB Plats CEO Steve Phiri said there had
been a modest recovery in the US. “I just hope it’s not cosmetic,’ he said, adding
that owing to thrifting in diesel autocatalysts, palladium would enjoy higher year-on-
year demand. Demand for autocatalysts in Europe – which comprises about 50% of
the market – had been downgraded, Phiri said.
Despite the muted performance of the platinum price, however, Phiri indicated that
platinum demand had actually increased 12% last year to 3.48 million oz, while
palladium demand was 5% higher year-on-year to 5.77 million oz. The average PGM
basket price was 4.7% higher year-on-year for RB Plats at some R16,282 per platinum
ounce. Palladium sales comprised 11.4% of RB Plats total revenue in the 2011
financial year, up from 9.8% in the previous year. Platinum sales contributed 65.8%
of total revenue, barely changed from the previous year. Headline earnings for the
financial year ended December came in at R273.7m; a 1.3% increase over the 2010
financial year.
AMPLATS
Phiri said he was watchful of potential opportunities given that Amplats, and its 80%
shareholder, Anglo American, was assessing how the company’s operations could be
reconfigured.
Amplats owns 12.62% of RB Plats, but Phiri said that BRPM – in which Amplats owns
a further 33% through its wholly-owned subsidiary, Rustenburg Platinum Mines – was
a profitable mine for both companies.
“There are other prospects that might come up,’ said Phiri.
Analysts have said details of potential restructuring could take the best part of a year
to complete, but Phiri has a different view: “If they announced it to the market, you
can be sure Anglo Platinum are already well advanced with the review.’
BRPM produced 281,598 oz of PGM (four elements), generating cash of just over R1bn,
in the financial year. This output was offset by 11,500 oz lost from safety related
stoppages enforced by the Department of Mineral Resources.
