Right man at the right time. So far.
Implats CEO Nico Muller was not the obvious choice for the top position at the mining company. But since his appointment in 2016, it seems he is exactly who Implats needed.
By David McKay officer at Royal Bafokeng Platinum and head of Gold Fields’ South Deep project, but Implats was a completely different beast and Muller was a relative unknown. So far, he seems to be scaling that challenge pretty well. So far.
“What a difference a year makes,” said one bank following Implats’ full-year numbers.
“Financial year 2018 was a transformational year at Implats: a long-awaited restructuring was articulated for the Impala Lease, the executive team was strengthened and the company has started the 2019 financial year with clear strategic and operational objectives and a well-funded balance sheet. PGM pricing is strong and a weakening rand should provide additional tailwinds to margin expansion and FCF (free cash flow) generation.”
It’s only fair to cite Citi’s Steyn who, after his early reservations, acknowledged signs of a recovery in Implats’ year-end numbers, published earlier this month.
The results were bleak but gave grounds for hope: a taxed loss of R10.8bn for the year ended 30 June, most of which flowed from impairments from the restructure of the Rustenburg section. Muller’s argument was that a lock-up of metal inventory will release funds while the company was sufficiently capitalised with R6.2bn in funds consisting of R3.7bn in cash and unused debt of R2.5bn.
But there’s more to do. Delivery of the restructuring of the Lease Area is the major concern. Muller has set forth plans to cut platinum production some 230 000 ounces a year – enough to reduce labour numbers at its Rustenburg shafts by 13 000 to 27 000 people over the next two years.
And scepticism remains. “With current suppressed platinum prices (at $802/oz at the time of this report, around 14% down year-to-date), we believe Implats will continue to burn cash in 2019, yielding negative free cash flow returns versus its peers,” said JPMorgan Cazenove in a report.
Implats registered a cash outflow of R3.7bn during its last financial year. ■ email@example.com CEO of Implats Analyst for Citi
Implats’ platinum operations in Rustenburg.