Implats opens production year in good form, saying pricing “robust” for PGMs

Implats CEO Nico Muller

IMPALA Platinum (Implats) kicked off its 2021 financial year in good form saying the impact of Covid-19 related interruptions had been “minimal” in the first quarter, whilst demand for platinum group metals (PGMs) was “strong”, and pricing “robust”.

This is good news for shareholders and investors after Implats CEO, Nico Muller, said in September there was a high likelihood of improving the free cash flow to dividend ratio owing to the likely strength in PGM fundamentals.

Production of 6E concentrate was 11% higher at some 859,000 ounces for the first quarter with the standout feature being a strong recovery in joint venture production which at 142,000 oz was 23% stronger year-on-year. First quarter refined and saleable 6E production was 58% higher year-on-year, the company said.

Implats has guided to production of between 2.8 million to 3.4 million oz 6E for the 2021 financial year which compares to refined output of 2.8 million oz in the 2020 financial year (2019: 3.13 million oz). Owing to maintenance activities, the company had 100,000 oz of concentrate stock on hand as of end-June.

Eskom power failures, diminishing reserves at Implats’ mature shafts and some unavailability of labour owing to Covid-19 affected milled production at the company’s flagship Rustenburg operations which came in at 2.96 million tons of ore, 2% lower.

Gross receipts at Impala Refining Services (IRS), which also processes third party concentrate, was 18% higher at some 474,000 6E oz as refined production increased 2% to 443,000 oz.

In September, Implats announced a R4/share final dividend for its 2020 financial year, taking the full-year payout – including a R1.25/share interim payment – to R4.2bn after receiving 56% more for its basket of metals in rands.

“I have got no doubt the markets will remain robust,” said Muller in September. “Our dividend policy is a minimum of 30% of free cash flow pre-growth, and in the absence of growth opportunities I am doubtful the distribution policy will remain at 30%. It is highly likely it will be increased.”