Stay far away

Finweek English Edition - - Marketplace Simon Says -

The Im­plats re­sults were painful, some­thing I thought the mar­ket would have ex­pected, but ap­par­ently not, as the share sold off af­ter post­ing a 137c HEPS loss for the year af­ter a mod­est 12c HEPS profit the pre­vi­ous year. The loss was im­pacted by a mas­sive R10.2bn im­pair­ment, al­though the bal­ance sheet looks de­cent with gross cash of R7.8bn. But the kicker is the com­ment, “Re­struc­tur­ing re­view un­der­way for a re­turn to prof­itabil­ity un­der new nor­mal pric­ing en­vi­ron­ment.” The pric­ing en­vi­ron­ment it refers to is plat­inum be­low $1 000/ounce and seem­ingly not mov­ing sus­tain­ably higher. Tak­ing an ex­change rate of say R13.50/$, that makes for in­come of some R13 500 per ounce. This while its cost per ounce is R22 691! I have pre­vi­ously writ­ten that in­vestors should avoid the en­tire plat­inum sec­tor and those two num­bers are why. I can’t see them meet­ing with­out some­thing ma­jor hap­pen­ing and that would likely need to be a large plat­inum miner clos­ing shop.

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