RBPlat on its way to be­com­ing a low-cost pro­ducer

Pretoria News - - COMPANIES - Di­neo Faku

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.

High­lights

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.

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