RBPlats curbs Styldrift mine expansion as tough times bite

ROYAL Bafokeng Platinum (RBPlats) the latest casualty of the global platinum market downturn, has slowed development work at its new R11bn Styldrift mine, shelving plans to raise R3bn this year.

RBPlats CEO Steve Phiri and chief financial officer Martin Prinsloo said yesterday taking on debt to continue building Styldrift, which is 56% complete and which has so far absorbed R4.8bn, could threaten the entire company.

RBPlats opted to keep “quality” ounces in the ground rather than sell cheaply in a depressed market. It also shelved a R70m study to expand Styldrift.

If the prevailing six-year low in platinum prices were to continue for the next five years, it would erode R7.5bn from revenue, Mr Phiri said. Styldrift would reach steady annual production of 320,000oz of platinum group metals from early 2019 if work continued unfettered.

RBPlats had outlined a capital expenditure profile of R2.9bn this year, R2.8bn next year, before dropping to R700m in 2019.

The executives declined to give a new time line as to when Styldrift would begin its ramp-up. Styldrift would be funded from excess cash at RBPlats’s profitable Bafokeng Rasimone Platinum Mine ( BRPM) and metal extracted from its on-reef development work.

Mr Prinsloo said Styldrift would generate cash, but declined to give a figure.

Citi’s Johan Steyn said BRPM would generate at best R150m a year to spend on Styldrift.

The environment for the local platinum industry has “quickly gone from bad to appalling in the last couple of months”, said HSBC analyst Emma Townshend.

Mr Prinsloo said although debt facilities could be secured, they would have come with many restrictions and conditions, meaning RBPlats would virtually place its destiny in financiers’ hands.

“We felt we are at an appropriate time to put a peg in the ground and not get onto this treadmill of entering debt,” he said.