IMPALA Platinum will post a spectacular increase in interim earnings, fuelled by higher platinum group metal prices and strong second quarter operational performance.
The miner said in a trading statement on Tuesday headline earnings for the six months ended December would be between 392% and 411% higher. Basic earnings which strips out exceptional items, are expected to rise by between 387% and 407%.
Implats said in an operational update last week that group production was 1.79 million ounces, just under one percent better than the comparative period last year. But there were production improvements at its Rustenburg mines as well as Zimplats where group output was 5.5% higher after expanding a smelter.
The group’s price received for its basket of platinum group metals increased 39.5% to R33,250 per 6E ounce sold year-on-year. There has been a 23% correction in the platinum price in last seven days but it is still 120% higher over the last year.
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.
