IMPALA Platinum (Implats) warned of a potentially significant cut in refined platinum group metal (PGM) production in the second half of its 2022 financial year after deciding to conduct a full rebuild of a furnace.
Commenting in an operational update and trading statement for the six months ended December 31, the group said today a Rustenburg furnace had been planned for a partial rebuild. But the stresses of the hard lockdown implemented by the South African government during the early stages of the Covid-19 pandemic in 2020 and inconsistent electricity supply from Eskom had resulted in “accelerated wear” of the furnace.
“The group is currently assessing the impact of the extended maintenance on refined production during H2 FY2022,” Implats said. “An update will be provided with the release of H1 FY2022 results,” it added referring to the publication of the numbers for the first half of its financial year, scheduled for March 1.
Refined production totalled 1.62 million ounces 6E for the first half of the financial year, 4.7% lower than in the first half of the previous financial year. Refined volumes in the comparative period benefited from increased availability of processing capacity due to the timing of annual processing maintenance, Implats said.
Sales totalled 1.55 million oz for the first six months, a 5% year-on-year decline. The US dollar basket price was 10% higher but this was mostly offset by an 8% strengthening of the rand against the dollar. The outcome was a 2% improvement in group sales revenue to R36,230 per 6E oz sold.
Commenting on production across the group for the period, Implats said it was affected by extended safety stoppages, intermittent industrial action and power supply interruptions at Impala Rustenburg. Concentrate production was consequently 4% lower year-on-year at 1.6 million oz.
From a financial perspective, basic earnings for the six months was expected to fall 39% and 50% to between R12.5bn and R15.3bn which Implats said was owing to two major exceptional items in the comparative period: a reversal of an earlier impairment and the prepayment of royalties.
Outstanding shares in the company increased following the issue of 30.6 million. These shares were in part payment of an offer to shareholders in Royal Bafokeng Platinum (RBPlat) that Implats is proposing to buy. It offered 0.3 Implats share per RBPlat share as well as R90 per share in cash.
As of mid-December Implats had built a stake in RBPlats of about 35% which made this month’s offer mandatory.
Implats’ offer compares to a rival bid from Northam Platinum which on November 9 bought a 32.8% stake in RBPlat for about R180/share worth about R17bn in total. As part of Northam’s share acquisition it also negotiated a put and call option agreement with Royal Bafokeng Holdings (RBH) and one of RBH’s subsidiaries that would see it inch up its stake to 36.1%.
