RBPlat keeps full-year guidance intact despite quarterly output drop

Royal Bafokeng Platinum (RBPlat), which is the subject of a takeover bid by Impala Platinum (Implats), reported a decline in the amount of ore it removed from the ground in the first quarter but kept its production forecast for the full year intact.

Total tonnes hoisted dropped 2.4% to 1.085-million tonnes as the disappointing performance of its Styldrift mine more than offset the decent performance from Bafokeng Rasimone Platinum Mine. Total tonnes milled for the reporting period rose 6.6% year on year.

In a quarterly update, RBPlat said costs per ounce of the basket of the four main metals the group produces leapt 22% during the reporting period from the matching period a year ago.

Mining companies have generally been grappling with rising input costs ranging from energy to consumables at a time when commodity prices were well off their historic highs.

Profit margins could come under further pressure after power utility Eskom implemented a tariff increase of 18.65% in April.

“Despite the ongoing challenges at Styldrift, management remains confident that the operational strategies implemented will yield improved volume, grade and cost performance during the second quarter,” RBPlat said in a statement.

Its full-year production guidance was kept unchanged at between 470,000oz and 490,000oz.

Meanwhile, Implats raised its stake in RBPlat to 45% over the past week, ahead of the selfimposed April 28 deadline to decide on the way forward.

The Public Investment Corporation (PIC), which manages more than R2.5-trillion in assets on behalf of government employees, is the potential kingmaker in the proposed deal with its shareholding standing at 10%. It remains unclear if the PIC will sell part or all of its stake.

Earlier in April, rival Northam Platinum backed out of a plan to acquire the remaining shares in RBPlat, citing the drop in commodity prices.

However, platinum group metals, which are primarily used to cut harmful emissions in internal combustion engines and for making jewellery, appear to have seen their prices bottom out. Northam already owns 35% of RBPlat.

The two rivals have been jostling for control of RBPlat for months, leading to frustration among stakeholders.

RBPlat has said the uncertainty means it is unable to plan for the future and as a consequence is also losing qualified personnel.