ROYAL Bafokeng Platinum (RBPlat) said the way had been cleared to resume dividend payments in the future following repayment of a “deferred consideration” – some R1.86bn – owed by the company to Anglo American Platinum (Amplats).
The money is for Amplats’ 33% stake in Bafokeng Rasimone Platinum Mine (BRPM) that RBPlat now controls outright.
Commenting in a trading statement, RBPlat said the “deferred consideration” had now been “… fully extinguished by the proceeds of the recent gold streaming agreement”. In terms of the initial deal to buy Amplats’ stake, RBPlat was to repay Rustenburg Platinum Mines, a subsidiary of Amplats, in three tranches with the first falling due this year.
Now, however, the debt is settled which also removes the need for RBPlat to issue shares in part payment for the BRPM stake to Amplats. The repayment of the consideration would also reduce RBPlat’s overall financing costs “… thus freeing up cash to support its strategy of delivering high quality growth, UG2 mining flexibility and it underpins the prospect of paying dividends in the future,” it said.
In October, RBPlat announced it had sold gold by-product from its platinum group metal (PGM) operations to US investment firm Triple Flag for $145m in cash.
The terms of the arrangement is that RBPlat will sell 70% of its gold production up to a maximum of 261,000 ounces and then 45% of total gold output with RBPlat participating in then spot prices via a 5% royalty by Triple Flag.
RBPlat forecast full-year headline share earnings of between 45 cents and 55 cents per share representing an 80% to 120% increase owing to improved pricing for PGMs and higher production.
Overall, PGM production was 9% higher year-on-year supported by a 57% increase in output from Styldrift, the firm’s R10.7bn development project. This overcame the negative effects of Eskom-related load-shedding which resulted in lost production.
There was also a 9% decrease in PGM production from BRPM which was affected by the shift in production at South shaft from Merensky to UG2 ore, the company said in a trading statement today. There were also lower Merensky grades achieved at North shaft Phase III.
“The growth in our business and improved market conditions supported significant growth in revenue and operating profit, especially reflected in the second half of 2019 performance, with revenue increasing by more than 100% and an EBITDA increase of nearly 250%,” the company said in its trading statement.
Basic share earnings would fall between 74.4% and 61.6% to between 20 and 30 cents per share. Shares in the company hit a 12-month high on February 24.
