IMPALA Platinum (Implats) gained operational momentum in the second quarter to post respectable production numbers for the six months ended December.
Group production was 1.79 million ounces, just under one percent better than the comparative period last year. Production improvements were registered at Rustenburg as well as Zimplats where group output was 5.5% higher after expanding its smelter.
This comes just as prices for platinum group metals storm back. Implats said its price received increased 39.5% to R33,250 per 6E ounce sold year-on-year. The PGM basket price is currently around R48,000/oz even after a significant 7.5% correction in the platinum price on Thursday.
Group units costs per 6E ounce increased 11% to R23,200 however. Input inflation was driven by structural adjustments in labour spend at Zimplats, said Implats. Costs were also higher on increased development rates at Marula and marginally lower stock-adjusted volumes at managed operations.
The price improvements bode well for Implats’ full year financial performance, ended June. Implats “should shoot the lights out with these PGM prices,” said René Hochreiter, an analyst for Noah Capital. Including chrome, nickel and copper prices, which Implats also sells as part of its basket, the aggregate price is R56,500/oz. The outlook is “seriously good”, said Hochreiter.
Expectations of a stronger performance will also raise hopes for special cash returns. UBS analyst Steve Friedman recently upgraded target prices for PGM shares specifying a preference for Valterra Platinum and Implats. “… [W]e see potentially more near-term catalysts for Implats through possible excess cash returns,” he said in a report recently.
Volatility in pricing is down to investors piling into platinum and palladium specifically as part of a broad sector interest in critical metals. Investment demand is linked to US stockpiling of certain metals, said BMO Capital Markets in a report. There had been stock build to the tune of 1.1 million oz in platinum (a 48% increase) and 400,000 oz in palladium (+15%) in the US.
“The accumulation of metal inventory in the US, stemming from potential future tariffs, has been a central driver of extraordinary price performance across many key metals over the last 12 months,” said the bank in a report. “Consensus seems to be narrowing in on a scenario whereby the stockpile disperses at some point over the coming weeks/months, relieving tight supply elsewhere, and deflating prices in the process,” it added.
