Am­plats slashes its net debt

De­spite low-price en­vi­ron­ment

The Star Early Edition - - BUSINESS REPORT - Di­neo Faku

AN­GLO Amer­i­can Plat­inum (Am­plats), the world’s big­gest plat­inum pro­ducer, slashed net debt in the half year to June, de­spite the low pres­sure en­vi­ron­ment. Am­plats, a sub­sidiary of An­glo Amer­i­can, yes­ter­day said it had gen­er­ated R4.3 bil­lion in cash and that net debt in the first half of 2017 had been re­duced to R5.9bn from R7.3bn at the end of De­cem­ber 2016.

AN­GLO Amer­i­can Plat­inum (Am­plats), the world’s big­gest plat­inum pro­ducer, slashed net debt in the half year to June, de­spite the low pres­sure en­vi­ron­ment.

Am­plats, a sub­sidiary of An­glo Amer­i­can, yes­ter­day said it had gen­er­ated R4.3 bil­lion in cash and that net debt in the first half of 2017 had been re­duced to R5.9bn from R7.3bn at the end of De­cem­ber 2016.

“The re­duc­tion in net debt was driven pri­mar­ily by a re­duc­tion in work­ing cap­i­tal,” Chris Grif­fith, Am­plats chief ex­ec­u­tive said.

The plat­inum price fell to $957 (R12 353) an ounce in the first half of 2017 from $971 in the first half of 2016, par­tially as a re­sult of a stronger US dol­lar fol­low­ing ex­pec­ta­tions that the US Fed­eral Re­serve will in­crease in­ter­est rates in the sec­ond half of 2017.

Grif­fith de­scribed the prices as be­ing the low­est since 2013.

“We are manag­ing the busi­ness for a low price en­vi­ron­ment. We con­tinue to re­duce costs, and im­prove pro­duc­tiv­ity,” he said.

Low prices have seen Am­plats cut close un­prof­itable shafts, in­clud­ing the Rusten­burg, Twick­en­ham and Marikana op­er­a­tions. The com­pany also de­cided to place the Bokoni mine on care and main­te­nance and was also sell­ing its Union mine to a sub­sidiary of Siyanda Re­sources and its share of the Pan­dora joint ven­ture to Lon­min.

“Where as­sets are not cash pos­i­tive, one has to make tough de­ci­sions,” he said.

Grif­fith also said in the cur­rent low price en­vi­ron­ment the fo­cus was on as­sets that re­quired low capex and of­fered quick re­turns, in­clud­ing the chrome plant that was built in the Aman­del­bult Mine.

The fo­cus has shifted to con­tin­ued dis­ci­plined cap­i­tal al­lo­ca­tion and the delever­ag­ing of the bal­ance sheet is a pri­or­ity, the com­pany said. As a re­sult Am­plats with­held the div­i­dend in the pe­riod cit­ing fu­ture cap­i­tal fund­ing re­quire­ments in an un­cer­tain macroe­co­nomic en­vi­ron­ment.

“The fo­cus re­mains on op­ti­mal stay-in-busi­ness cap­i­tal al­lo­ca­tion and the com­pany would like to re-in­tro­duce a sus­tain­able div­i­dend once the bal­ance sheet has strength­ened. In the cur­rent en­vi­ron­ment the fo­cus will be on low cap­i­tal, fast-pay­back and value ac­cre­tive pro­jects,” Grif­fith said.

Earn­ings be­fore in­ter­est, taxes, de­pre­ci­a­tion and amor­ti­sa­tion be­fore im­pair­ments, were R4bn, down 26 per­cent com­pared with R5.4bn in the first half of 2016.

It said that un­con­trol­lable items – which in­clude in­fla­tion, US dol­lar me­tal prices and the rand-dol­lar ex­change rate – re­duced earn­ings by R1.5bn.

Rene Hochre­iter, a min­ing an­a­lyst at Noah Cap­i­tal Mar­kets, said that Am­plats had posted a good set of re­sults un­der the cir­cum­stances.

“Cash flow is ex­pected to re­main flat. The plat­inum price will also re­main flat. I do not ex­pect any ex­cite­ment in the sec­ond half of the year, but not neg­a­tive,” he said.

Seleho Tsatsi, an in­vest­ment an­a­lyst at An­chor Cap­i­tal, said Am­plats was bet­ter placed than the ma­jor­ity of peers for the cur­rent low price en­vi­ron­ment.

“They’re a lower cost miner than the likes of Im­plats and Lon­min,” he said.

The com­pany also re­duced debt and did not pay share­hold­ers div­i­dend.

Am­plats shares were down 1.94 per­cent to close at R305.47 on the JSE yes­ter­day.

PHOTO: SIM­PHIWE MBOKAZI

Chris Grif­fith, the chief ex­ec­u­tive of An­glo Amer­i­can Plat­inum, the world’s big­gest plat­inum pro­ducer, says the com­pany’s re­duc­tion in net debt is driven pri­mar­ily by a de­crease in work­ing cap­i­tal.

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