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.

Finweek English Edition - - In Brief In The News -

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. ■ ed­i­to­rial@fin­week.co.za CEO of Im­plats An­a­lyst for Citi

Im­plats’ plat­inum op­er­a­tions in Rusten­burg.

Jo­hann Steyn

Nico Muller

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