IMPALA Platinum (Implats) CEO Nico Muller said he was “anxiously waiting” on a US interest rate cut as it would be a boost to languishing platinum group metal (PGM) prices.
Reporting its full year results ended June, the group said today dollar revenue on metal sales declined just over a third during the period despite deficits in three of the key PGM metals.
The outcome for Implats was a R17.3bn basic earnings loss and a R4bn cash outflow. As the firm pays shareholders a portion of earnings, the dividend was passed.
“Our view is that PGM prices are not driven only by market fundamentals but by global economic sentiment,” said Muller in a press call.
“I believe that if you see a reduction in interest rates … it will create improved sentiment and incentivise buying behavour from our key customers. I personally believe there will be support for PGM price increases when that happens.
We have spoken about interest rate cuts in the US and Europe for several years and so we are anxiously waiting the actual reduction. I think it will be beneficial to the industry.”
Implats was hit hard in the 2024 financial year in which lower prices resulted in restructuring across its operations and a R19.8bn write-down on the firm’s Bafokeng, Impala Canada, Lease Area (Rustenburg) and the Mimosa mines as previously reported.
Expansions were also shelved including the Merensky project at Two Rivers, iced in February, which Implats shares with African Rainbow Minerals. Muller said today it was “highly unlikely” suspended projects would make their way back into the market.
Implats’ numbers were also impacted by the cost of restructuring, as well as the cost of a black economic empowerment deal at Impala Bafokeng (formerly Royal Bafokeng Platinum) which Implats bought last year.
At the headline level, excluding exceptional items, earnings came in at R2.4bn or 269 cents per share, a decline of 87% and 88% respectively.
The group ended with adjusted net cash of R6.9bn. Promisingly, it was cash flow positive in the second half of the period under review after an outflow of R4.7bn in the first half.
Commenting on the mothballing of the Merensky mine expansion at Two Rivers, Implats said it would limit “the funding requirements that would have been required to ramp-up production during a weak pricing environment and allows for a refocus on UG2 operations”.
A total of 4,200 jobs were cut at the group during the restructuring, now largely complete. There were no forced retrenchments including fourth quarter restructuring at the South African operations, also completed.
“Natural attrition, together with re-deployment, reskilling efforts and the uptake of voluntary separation packages, ensured no employees were forcibly retrenched,” said Muller.
Implats has guided to 3.45 and 3.65 million oz in refined and saleable production for the current financial year at a unit cost of between R21 000 and R22 000 per 6E ounce on a stock-adjusted basis, a 5% year-on-year increase. Unit costs for the year under review were R20 922/oz, 5% higher. Refined production was 3.38 million oz.
Despite the restructuring production at Implats was not meaningfully cut. Muller said that it was critical the company controlled costs through sustained output. In terms of Competition Commission guidelines, it was also prevented from influencing the market by improving market conditions for the sector by cutting ounces.
