Implats retirees to boost ops

[] –IMPALA Platinum (Implats) has brought two former senior mining executives out of retirement to help bolster mining operations at its Rustenburg lease area.

Implats CEO David Brown confirmed a recent report by JP Morgan Cazenove analysts Steve Shepherd and Allan Cooke that former CEO John Smithies and former head of the Rustenburg operations Paul Visser had been recalled from retirement.

In their in-depth report on Implats, the JP Morgan analysts had expressed concern over “limited professional mining skills at the head office and senior top operations management levels’.

The analysts said: “This concerns us in that as operations move to greater depths at the core Rustenburg lease area, the mining engineering challenges and risks will increase.

“Mining companies generally employ senior mining professionals in top line management positions to mentor, support, interrogate and direct the work and operating logic of younger, less experienced subordinate mining managers to aid safety and efficiency and to create smooth succession within the organisation.

“We continue to believe the appointment of a hard-hitting, professional mining engineer to direct the group’s mining ops in South Africa is needed.’

Commenting on the return of Smithies, the analysts said: “While we rate him as one of Impala’s best mining engineers and managers, he had retired and clearly cannot provide an enduring solution.

“One of his successors as mining boss at the Lease area – Paul Visser – has also been recalled from retirement to advise in restoring the ops – but again this can hardly be considered a long-term solution.’

Brown acknowledged that there was a mining skills “differential’ at the “head office and senior top operations management levels’ in the group, but said Implats had adequate mining engineering capability at its operating levels.

He said: “The Rustenburg lease has been through some difficult times and it would be foolish not to call in executives like John and Paul, who have more than 60 years of experience between them.

“We approached them and they were very willing and happy to help out, even though they had retired. Both have great loyalty to the company. They have the Impala tattoo if you like.’

Brown said Smithies was being used in a “very part-time role’ to help with mine reviews and planning. Visser was mentoring a number of the younger managers “to make sure skills are passed on’.

Smithies stepped down as CEO in July 2001, when Keith Rumble was appointed.

Visser retired in 2005 after a 36-year career with Implats.

Asked about the recent strength in the platinum price which has moved above $1,700 per ounce, Brown said: “I believe it’s the result of a bit of a panic in the market over perceived metal shortages, probably because Lonmin has just had its annual smelter problem.

“I don’t particularly like platinum at $1,700 and I would prefer the price to be around $1,600. I think the platinum price is a bit overdone at the moment.

“The problem is that at $1,700/oz the price starts to hit some of the demand elements in the market and, in particular, the important jewellery business.’

Shepherd and Cooke said their investment rating for Implats was “neutral’, with a 12-month share price target of R220 a share. The Implats share price presently sits around R219.

They said: “Sustained success in rectifying the poor performance of the group’s SA ops over the past two years, turning the Impala lease area in particular, will be crucial to Implats’ rating in our view.’

They added that they would “view positively’ a decision to shift Implats’ production centre of gravity towards Zimbabwe from the “increasingly expensive and problematical lease area’ at Rustenburg.

The JP Morgan Cazenove analysts believed that Implats could easily expand the operations of its Zimplats subsidiary to produce 1 million oz of platinum annually.

“Unfortunately this may take longer than management would wish, owing to the uncertain political environment in Zimbabwe.

“A threat of enforced indigenisation makes it very difficult for Implats to progress an aggressive investment programme – much as it clearly wishes to.’

Turning to merger and acquisition possibilities, the analysts said: “Were Implats to revisit its acquisition of Northam, we believe the market could react favourably – it needs shallow growth options in SA, in our view.

“We thought the failed share-based deal was properly priced and were surprised when it fell through.’

The writer owns shares in Impala Platinum.