Amplats pays bigger dividend
Mining firm has increased payout policy from 30% to 40% of earnings
Anglo American Platinum (Amplats) reported a sharply increased dividend, paying R3bn to shareholders as it implemented an improved policy to reward investors after a strong year of cash generation from its restructured portfolio. Amplats, which is the world’s largest platinum miner and 80% owned by Anglo American, reported taxed profit of R6.99bn for the year to end-2018 compared with R1.9bn the year before.
Anglo American Platinum (Amplats) reported a sharply increased dividend, returning R3bn to shareholders as it implemented an improved policy to reward investors after a strong year of cash generation from its restructured portfolio.
Amplats, which is the world’s largest platinum miner and is 80% owned by Anglo American, reported post-tax profit of R6.99bn for the year to end2018 compared with R1.9bn the year before.
Revenue grew to R74.6bn from R65.7bn on the back of strong price performances for palladium and rhodium.
Amplats declared a final dividend of R7.51 per share, or R2bn, bringing the total dividend for the year to R11.25 per share, or R3bn for the year, in line with its new policy to return 40% of headline earnings to shareholders, up from 30%.
Not only does the revised policy put Amplats in line with its parent, it means Anglo American will receive $115m in the final dividend payment, contributing towards its own dividend payment estimated at $1.05bn when the company announces its results on February 21, JP Morgan said in a note.
The change to the dividend policy underscores Amplats’s belief that its restructured mining portfolio to remove expensive, deep-level mines in favour of shallow, mechanised operations can sustainably generate cash, said CEO Chris Griffith.
After cutting more than R15bn of debt through asset sales and forward sales and, for 2018, the generation of cash from its mining operations in SA and Zimbabwe, the group was able to reward its shareholders and plot its growth trajectory from a suite of options within the company, he said.
The rand price for the basket
platinum-group metals of (PGMs) coming from Amplats increased 15% to R29,601/oz.
Amplats ended the year in a net cash position of R2.9bn after starting the period with net debt of R1.8bn.
The company is assessing a number of low-capital, quickreturn projects at its open-cast Mogalakwena mine in Limpopo, and using its Mototolo mine to tackle the Der Brochen deposit, as well as new technologies and operational efficiencies to unlock cheap production.
Asked whether this would be expansion in a market that could not absorb much more platinum, Griffith said the mediumto longer-term outlook for the metal was positive. Amplats expects to produce up to 4.5million ounces of PGMs in concentrate in 2019 and has refined output of up to 4.9-million ounces of PGMs as it worked through stockpiled material from 2018.
Platinum would account for 2.3-million ounces of refined metal and 1.5-million ounces of palladium. Amplats generated 4.8-million ounces of refined PGMs in 2018, a 6% decrease due to planned smelter rebuilds, while sales of 5.2-million ounces of PGMs were recorded for the year.
Eskom remained a concern for Amplats, Griffith said. The company had to shut down between 40MW and 80MW per day of consumption, losing 14,000oz of platinum, or 28,000oz of PGMs, to power curtailments in the week starting February 11.
He emphasised this metal could be recovered if there were no more curtailments during the course of the year.
Amplats is considering building a 60MW solar plant at Mogalakwena in Limpopo and this could be expanded to 100MW, but Eskom had to approve anything bigger than 10MW, Griffith said, pointing out this was a long-dated project.
Amplats uses about 500MW of power, with smelting and refining accounting for 235MW, mining 110MW and concentrating 150MW.