Implats to consider bids for Marula, Afplats as Muller crystallises view on asset mix

Impala Platinum CEO, Nico Muller

IMPALA Platinum (Implats) would consider selling its 75% stake in the Marula joint venture as well as Afplats, a project it impaired for R1.67bn this year after paying R1.1bn for the prospect in 2007.

Responding to an analyst’s question at the firm’s full-year results presentation, Implats CEO, Nico Muller, said that the company would be “a receptive audience” regarding the sale of any asset that was not low cost, could not be easily mechanised, and did not have significant scale.

“There has been an expression of interest in Afplats and Marula,” he said. Marula, which produced 83,000 ounces of platinum in concentrate in the year ended June, has been a problematic asset in the past.

However, the mine stormed back in the 2019 financial year generating R380m in free cash flow after leaking R199m in cash the year before. The improvement was largely down to the lift in the rand basket of platinum group metals.

The shares in Marula Implats doesn’t own are held by black empowerment groupings including Mmakau Mining, a company in which Bridgette Radebe is a shareholder.

Muller also said the company had received enquiries of interest for its now profitable No. 1 Shaft at its Rustenburg (Impala Lease) complex. The shaft is earmarked for closure in the first half of the 2020 financial year but there was a possible out-sourcing deal that could be signed. “We will probably conclude a commercial arrangement in the next three months.”

Regarding other Impala Rustenburg shafts that might have otherwise been closed was No. 12 shaft which produced a cash profit of R120m in the 2019 financial year on the back of improved mining flexibility. “We have delayed its potential closure by a year. We don’t see a reason, currently, to close it,” said Muller.

As for acquisitions or organic growth Implats said might come into play assuming the sustained improvement in the business, the firm’s 15% stake in the Waterberg Joint Venture is an obvious candidate.

“It is exactly the kind of orebody we favour,” said Muller.

The project is owned in joint venture with Platinum Group Metals (PTM), a Toronto-listed company whilst South Africa’s Hosken Consolidation Investments has taken an important beachhead in the company in the last 18 months.

The partners are in the final stage of a feasibility study. First scoped at about 700,000 ounces of platinum group metals per year, Muller said production of 400,000 PGM oz was being considered in a ratio of 3:1 palladium to platinum.

“Once the feasibility is completed we will look at the capital [required for the project],” said Muller when asked about the prospectivity of the Waterberg Joint Venture. He added, however: “We do foresee it will be at the low end of the cost curve. But there are a number of ducks we need to get in place to approve it.

“We also need to take a long-term outlook on metal prices,” he said.