THE cash rolled in for Royal Bafokeng Platinum (RBPlat) during the first three months of 2021. The platinum group metal (PGM) producer today said it was net cash to the tune of R3.9bn, a more than doubling over the R1.64bn position as of December 31.
“Our business has enjoyed strong cash flow generation and we will continue to optimise returns through a continued focus on capital allocation,” it said in a first quarter report in which it also kept production guidance of 475,000 to 525,000 oz 4E unchanged.
If achieved, this would be a one quarter improvement in production year-on-year at a time when PGMs are thriving. At $2,792/oz, the palladium price is scaling all-time highs whilst previously minor PGMs such as iridium and rhodium have made a substantial positive contribution to the PGM rand basket price.
At the end of the reporting period, RBPlat had R2.1bn in debt available and cash and cash equivalents of R4.46bn.
RBPlat announced at its year-end results in February that it would pay a maiden dividend for its 2020 financial year of 575 cents per share, equivalent to 50% of free cash flow before expansionary capital.
For the first quarter of the 2021 financial year, PGM production was 14.2% higher compared to the first quarter of its 2020 financial year. The improvement was despite some negative influences in the first two months of the year including the impact of the second Covid-19 wave that swept through South Africa.
There was also a power curtailment following Eskom load-shedding (power rationing), whilst a fall of ground accident – involving a fatality at the firm’s newly commissioned Styldrift project – resulted in production downtime.
Capital expenditure during the period totalled R321.7m, a year-on-year decline of 1.7%. But expansionary capital fell steeply, by 52%, to R117m owing to the completion of the Styldrift which has cost about R13bn to build.
It remains to be seen whether the inflow of cash in the quarter will improve the mood of the firm’s CFO, Hanré Rossouw, who said in February that the market ought not get carried away with itself as commodity bubbles had a way of popping.
Nonetheless, the further strengthening of RBPlat’s balance sheet should hearten shareholders hoping for another generous distribution of cash to match the reinstated dividend in 2020.
Shares in the company were largely unchanged on the Johannesburg Stock Exchange today, although on a 12 month basis the stock has trebled. RBPlat is currently capitalised at R33.14bn.