Implats reports ‘exceptional’ interim results

As Impala Platinum (Implats) nears the exit of its first shaft as part of a two-year restructuring process, the world’s secondlargest platinum miner reported a sharp swing to profit, sending it shares soaring.

Implats, which has benefited from higher prices and improved performances, reported a post-tax profit of R2.5bn for the six months to end-December compared with a R164m loss the year before. Revenue increased to R23.5bn from R17.3bn. The market has anticipated the improvements in Implats’s performance and its shares have increased by 64% since the start of the year.

“Free cash flow generation, net debt reduction to R1bn versus R3.8bn in first half 2018 are in our view ingredients of exceptional performance, supported by very good cost control and commendable safety performance,” Investec analyst Nkateko Mathonsi said in a note. “Even more impressively, the restructuring plans are precisely on track,” she said.

The good work done at the Rustenburg mines in returning them to being the key driver of revenue and profit in the interim period as part of the restructuring could, however, be derailed if there was a secondary strike at the mines or a wage strike, said CEO Nico Muller.

The Association of Mineworkers and Construction Union (Amcu) has served notices on 11 mining companies that it would embark on a secondary strike to pressure Sibanye-Stillwater to end a strike at its gold mines.

The secondary strike is suspended until an urgent application to interdict the strike is decided by the Labour Court.

The Rustenburg mines would lose 4,500oz of metal a day and lose R73m a day in revenue, Muller said.

“It would be devastating at Rustenburg. It would be heartbreaking,” he said, noting that the mines had become the “most prominent revenue contributor in the past six months”.

Platinum in concentrate from its own operations was flat at 678,000oz, despite the restructuring. Implats cut its workforce by 1,500 people during the six months as it started on its twoyear restructuring process at its core Rustenburg mines.

Platinum sales increased by 19% to 773,000oz. There was a 16% improvement in the price for the basket of PGMs the company sold for the year.

Despite the strong prices for PGMs, driven by all metals except platinum, Implats remained steadfast in its strategic plans around restructuring its Rustenburg mines, but timing and options around assets could be tweaked, said Muller.

The plan remains to reduce the number of Rustenburg shafts to six from 11 and have a workforce of 27,000. Platinum production would fall to 520,000oz from 750,000oz, he said.