IMPALA Platinum (Implats) pounced on recent price improvements in iridium and ruthenium to de-stock metal inventories, selling 60,000 oz of a total 100,000 oz 6E PGM inventory, the group said in a third quarter production update today.
From a concentrate and refined production perspective, the three month and nine month numbers were positive, largely owing to the impact of the South African government’s hard Covid-19 lockdown regime which had commenced a year ago.
The strong production showing lends further support to expectations for standout financial results when the group reports its full year numbers in early September.
On February 25, Implats posted basic interim earnings of R25.1bn compared to R3.4bn previously. It also lifted the dividend ratio to 40% of free cash flow before growth capital, paying an R10/share interim dividend, equal to R7.9bn.
Commenting on its production performance for the three months ended March, Implats said it encountered electricity supply interruptions as well as “elevated community unrest”. Nonetheless, it increased PGM concentrate production and sales year-on-year.
“Our people were faced with additional hurdles created by intermittent power provision and elevated community unrest in South Africa – a harsh reminder of the challenging socio- economic environment, which has been compounded by the scourge of Covid-19,” said Nico Muller, CEO of Implats in a statement to the JSE.
Total group 6E concentrate production, including metal from joint ventures, increased 4% year-on-year to 783,000 oz for the three months whilst refined production fell 7% to 800,000 oz. The reason for the refined production decline was that Implats worked through inventory drawdown in the third quarter of last year.
In addition to Eskom interruptions, Implats also contended with the effects of a furnace reline at Zimplats, the start of scheduled maintenance at No. 5 furnace at Impala Rustenburg operations, and interruptions to hydrogen supply at its base metals refinery. Sales for the three month period totalled 862,000 oz, an increase of 14%.
Implats said it had undertaken additional destocking of iridium and ruthenium as demand and pricing for these metals improved. A structural supply deficit in the entire PGM basket has seen pricing for previously ‘minor’ metals improve. Rhodium, for instance, has more than doubled in price in the past 12 months.
The quarterly performance took gross 6E concentrate production to 2.47 million oz for the nine month period, a year-on-year increase of 8%.
From a refined production perspective over nine months of the financial year, total 6E output increased 14% year on year to 2.49 million oz. Palladium volumes were nearly a quarter higher owing to a full year’s production coming through from Impala’s Canada operations. Rhodium and platinum volumes also improved 10% and 9% respectively.
Sales totalled 2.48 million oz for the nine months, an increase of 19%. Partly as a result of minor metals de-stocking, some 60,000 oz of a 100,000 oz excess 6E concentrate inventory was worked through.
Implats said it was on course to meet 2021 production metrics guidance including between 3.2 to 3.5 million 6E oz in group refined production.