RBPlat on its way to becoming a low-cost producer
ROYAL Bafokeng Platinum (RBPlat) yesterday surprised the market with news that it had trimmed its production costs as it improved output in the quarter ended September.
RBPlat said that a 10.2 percent increase of milled volumes at its Bafokeng Rasimone Platinum Mine (BRPM) coupled with a 2.9 percent decline in cash operating had resulted in a 11.9 percent decline in the unit cash operating cost a ton milled to R1 081.
It said higher volumes at BRPM helped to cut the cost of producing platinum ounces by 10.9 percent to R14 535 for the quarter, the JSE listed company said. The BRPM is a joint venture between RBPlat and the world’s biggest platinum producer Anglo American Platinum.
RBPlat said that cash operating costs for the quarter declined 2.9 percent to R724 million compared to the corresponding period last year.
It said the costs came against the backdrop of a restructuring, which involved trimming operational fixed costs and suspension of the South shaft UG2 mining in favour of higher margin ounce production.
As a result of the restructuring, RBPlat cut its workforce by 520 employees and re-deployed 60 percent of the south shaft UG2 stoping crews to superior margin South shaft Merensky and North shaft UG2 production areas.
In March RBPlat launched their first convertible bond for R1.2 billion as part of a robust funding package to ramp Styldrift to help it increase production from 50 000 tons a month to 150 000 tons a month.
The bond issuance was aimed at helping the company raise the funding to reduce the costs even further and also lower their cost of production.
In terms of production highlights, total tons delivered to concentrators increased by 7.2 percent to 793 000 tons, with BRPM contributing 644 000 tons and Styldrift 149 000 tons. Total milled volumes for the quarter increased by 8.1 percent to 825 000 tons in line with the higher mining volumes.
BRPM contributed 670 000 tons and Styldrift 155 000 tons.
The total capital expenditure rose by 129.7 percent or R346m to R613m compared to the third quarter of 2016. The key contributor was a R342.6m increase in expansion capital at Styldrift in line with the increased mining and construction activities related to the ramp-up scheduled.
Rene Hochreiter, a mining analyst at Noah Capital Markets said yesterday that RBPlat has the potential to become a relatively low-cost producer and costs were likely to go even lower by November 2018.
“Costs have come down faster than I thought. It is difficult to cut costs in South African mines with high labour and procurement costs. RBPlat is now in the middle of the cost curve,” said Hochreiter.
Production at Styldrift is being planned as a bord and pillar mining method, which was 50 percent cheaper than conventional mining.
RBPlat shares remained unchanged on the JSE yesterday to close at R31.