ANGLO American Platinum (Amplats) on Monday said it would pay a special cash dividend of R15.7bn, equal to R59 per share.
In addition to the miner’s per policy dividend of 40% of headline earnings – equal to R800m or R3/share – the payout amounts to a generous parting gift to 67% shareholder, Anglo American which in June will demerge its platinum unit.
The double payout represents all of Amplats’ net cash of R17.6bn as of December 31 in a year of significant pain for the group in which 3,700 jobs were affected by a R3.5bn restructuring, mostly at Amandelbult mine, and projects were curtailed.
Anglo would retain a 19.9% stake in Amplats but would relinquish all of its current board and committee representation in the unit.
Announcing its results for the 12 months ended December, in which the company reported a 45% year-on-year decline in basic share earnings of R26.83/share, Amplats said the payout represented “the most efficient method of realigning the capital structure ahead of the demerger”.
“This also reflects our confidence in the ongoing ability to generate cash flow through a combination of our world class integrated value chain and operational excellence,” it said.
Amplats CFO Sayurie Naidoo told Miningmx in an interview that in arriving at the payout, the company recognised it had been “reliant on Anglo from a balance sheet perspective,” adding: “We have a strong balance sheet and we have got cash on hand, so we landed on once-off additional dividend”.
“It is normal as part of a demerger that there will be a discussion on appropriate balance sheet,” she said. Amplats planned to be in a cash neutral position in its current financial year, maintaining a 1x Ebitda to net debt ratio which Naidoo said was competitive against its peer group in the platinum group metals sector.
“We still remain committed to a disciplined capital framework. Looking at what can distribute, we will still invest in the business and maintain our 40% base dividend [payout] still consider our capital projects including Mogalakwena underground,” Naidoo said.
Asked about the share overhang risk given Anglo has maintained a stake in Amplats CEO Craig Miller said it was to “deal with some of flow back issues and expresses confidence “in our ability to deliver” into strategy. The shares would be sold “in an orderly fashion agreed with ourselves” once a lock up period “commensurate with other demergers” had been served, Miller said.
Cost improvements
2024 was another tough year for PGM miners as prices remained flat following heavy selling in the two previous years. Amplats recorded a 13% decline in its realised rand-denominated PGM basket price driven by multi-year price lows in palladium and rhodium which fell 24% and 30% respectively during the year.
Total PGM production fell 7% to 3.6 million PGM oz but Amplats drew on its inventory to record a 3% improvement in refined production of 3.92 million oz.
Cash operating costs fell 3% to R17,540/oz while its all-in sustaining costs of $986 per 3E ounce represented a 13% year-on-year improvement and compares to its 2024 target of $1,050/oz. In addition to the R3.5bn once-off restructuring costs Amplats also absorbed a R500m write down which contributed towards headline earnings of R8.4bn, equal to R32.05/share.
Amplats generated operating free cash flow of R14.6bn, ending with its strong net cash position of R17.6bn, to be distributed to shareholders.
