Am­plats to take R2.2bn im­pair­ment knock

Plat­inum pro­ducer ex­pects its ba­sic earn­ings to shrink up to 189% in half year to June

The Star Early Edition - - COMPANIES - Di­neo Faku

AN­GLO Amer­i­can Plat­inum (Am­plats), the world’s big­gest plat­inum pro­ducer, said yes­ter­day that it ex­pected im­pair­ments to­talling R2.2 bil­lion to re­sult in ba­sic earn­ings shrink­ing by up to 189 per­cent in the half year to June.

Am­plats said the plunge was pri­mar­ily a re­sult of post­tax obli­ga­tions, a write down of a term loan to At­latsa Re­sources and a loan to the Bak­gatla Ba-Kgafela com­mu­nity.

The im­pair­ments also in­cluded the Union Mine, which the com­pany said in Fe­bru­ary it would sell to a sub­sidiary of Siyanda Re­sources for R400 mil­lion, R950m eq­uity in­ter­est in Bafo­keng Rasi­mone Plat­inum mine owned by Royal Bafo­keng and the R45m eq­uity for Bokoni Plat­inum.

It said as a re­sult, ba­sic earn­ings were ex­pected to de­cline be­tween R1.06 bil­lion and R1.37bn, which was be­tween 169 per­cent and 189 per­cent lower than the prior year’s re­stated fig­ure of R1.54bn.

The loss trans­lated to a ba­sic earn­ings a share loss of be­tween 405 cents a share and a loss of 520c a share, which was be­tween 169 per­cent and 188 per­cent lower than the prior year re­stated fig­ure of 588c.

Am­plats said it also ex­pected head­line earn­ings to drop be­tween R550m and R875m, which was be­tween 67 per­cent and 47 per­cent lower than the prior year re­stated fig­ure of R1.65bn and to be­tween 210c and 335c a share, a de­cline of be­tween 67 per­cent and 47 per­cent than the prior year re­stated fig­ure of 629c.

The com­pany blamed tech­ni­cal prob­lems for lower re­fined pro­duc­tion in the pe­riod.

It said the Water­fall Num­ber 2 fur­nace had been re­fur­bished, but there had been a back­log from 2016 of some 65 000 ounces of plat­inum which was ex­pected to be made up dur­ing the sec­ond half of 2017.

It also said a high-pres­sure wa­ter leak at the con­verter plan­thad im­pacted one con­verter plant Phase A on June 4.

Last week Statis­tics South Africa said that while min­ing pro­duc­tion in­creased 3.6 per­cent year-on-year in May, plat­inum group me­tals (PGM) were a sig­nif­i­cant neg­a­tive con­trib­u­tor and shrank 17.5 per­cent in the pe­riod.

Seleho Tsatsi, an in­vest­ment re­searcher at An­chor Cap­i­tal, said the low earn­ings fore­cast and low pro­duc­tion were no sur­prise. “It is no se­cret that the (plat­inum) sec­tor as a whole is un­der pres­sure, due to low rand PGM prices,” Tsatsi said.

“Whilst ev­ery­one in the in­dus­try is strug­gling, Am­plats has the rel­a­tive ad­van­tage to peers of a gen­er­ally lower cost base.”

The dim fore­cast came a day af­ter Am­plats com­peti­tor Lon­min, which is the world’s third big­gest plat­inum pro­ducer, im­proved min­ing pro­duc­tion and cut costs in the third quar­ter to June.

Tsatsi said Am­plats earn­ings were less geared to rand PGM prices due to this lower cost base and be­cause from next year a greater pro­por­tion of earn­ings would come from the re­fin­ing busi­ness.

“De­spite the pres­sure that they’ve been un­der re­cently, Am­plats’ share (and all plat­inum min­ers’ shares) con­tinue to re­flect higher rand plat­inum prices and need higher plat­inum prices to jus­tify the cur­rent val­u­a­tions,” he con­cluded.

Am­plats shares dropped 0.8 per­cent to R315.50.

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