Implats preps market for earnings windfall as PGMs revenue rises 58.8% for 2021

IMPALA Platinum (Implats) is set to post blockbuster year-end numbers, according to a statement today in which it said sales increased while revenue per 6E platinum group metal (PGM) ounce was 58.8% higher year on year.

The group averaged a PGM oz of R39,478 against a unit cost of R14,000/oz largely owing to record palladium and rhodium prices during the year. It also took advantage of the price spike in ruthenium which it held in inventories, some of which was cleared.

The downside, however, was that Eskom power interruptions and changes to scheduled maintenance owing to Covid-19 disruption resulted in lower destocking of in-process metal inventory than planned.

Production of gross concentrates was 15.6% higher at 3.29 million oz for the year comprising of a 17.9% increase in output from managed operations (2.37 million oz) and a 10.3% increase in concentrate production (561,000 oz) from its joint ventures.

Production of refined PGMs, including oz from the firm’s Canadian operations bought in the 2020 financial year, increased 16.3% to 3.27 million oz. Implats previously issued guidance for this year of 3.2 to 3.5 million oz in group refined production.

Sales totalled 3.27 million oz.

Basic and headline earnings were expected to be at least 20% higher or at least R19.2bn than the R16bn reported for the 2020 financial year, Implats said.

On a basic share earnings basis, there would be a benefit from an R10.6bn reversal of a previous impairment loss. Headline share earnings would be assisted by a once-off non-cash IFRS2 BEE charge of R1.5bn arising on the Marula BEE loan refinancing.

In February, Implats increased the dividend ratio to 40% of free cash flow before spending on growth capital, paying shareholders an R10/share interim dividend or R7.9bn.

Implats is due to report its year-end numbers on September 2. A further detailed trading statement would be issued before that date.

PGM companies are riding high amid record dollar prices, and offsetting a strengthening of the rand and mining inflation.

Implats said in its trading statement today that inflationary pressure were “… compounded by targeted spend on development to improve mining flexibility and asset integrity at Impala Rustenburg, as well as Covid-19-related costs”.

On July 26, Anglo American Platinum unveiled an R175 per share interim dividend equal to 100% of the record interim headline earnings.

Headline earnings of R46.4bn were nearly six times higher than the R6.7bn unveiled at the interim stage last year.

Amplats said its rhodium and palladium prices surged to all time highs of $30,000/oz and $3,000/oz respectively during the six month period.

Platinum achieved a six year high of above $1,300/oz. The minor PGMs, iridium and ruthenium, also made positive contributions as strong industrial demand took iridium to an all-time high of $6,300/oz and ruthenium to a 14-year high of $800/oz, said Amplats.