Stay far away
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.