Op­er­at­ing costs surg­ing to R5.6bn are hurt­ing RBPlats’ share price

Pretoria News - - BUSINESS REPORT - DINEO FAKU dineo.faku@inl.co.za

ROYAL Bafo­keng Plat­inum (RBPlats) took a hit on the JSE yes­ter­day, fall­ing 4.38 per­cent to R47.81 as the group failed to take ad­van­tage of strong metal prices and es­ca­lat­ing costs, de­spite pledg­ing an an­nual div­i­dend pol­icy for the year to the end of De­cem­ber.

The group said year-on-year cash op­er­at­ing costs surged to R5.6 bil­lion in 2019 from R2.7bn in 2018 as a re­sult of Styldrift reach­ing com­mer­cial op­er­at­ing sta­tus on Jan­uary 1, 2019.

RBPlats chief ex­ec­u­tive Steve Phiri said the group re­mained con­cerned about over­all vol­ume and cost per­for­mance that did not meet ex­pec­ta­tions.

“Records mean noth­ing if we are not op­ti­mis­ing vol­umes. This is a vol­ume game. We want to im­prove costs, mar­gins and sus­tain pro­duc­tion at

Bafo­keng Rasi­mone Plat­inum Mine (BRPM),” said Phiri.

RBPlats, which did not pay a div­i­dend in 2019, an­nounced that the board ap­proved a min­i­mum of 10 per­cent of free cash flow, be­fore growth cap­i­tal, while main­tain­ing dis­cre­tion to con­sider bal­ance sheet flex­i­bil­ity, and pre­vail­ing mar­ket con­di­tions.

“This will be done through an an­nual div­i­dend each fi­nan­cial year, with con­sid­er­a­tion also given to spe­cial div­i­dends, where ap­pro­pri­ate,” said the group.

Phiri said RBPlats was con­fi­dent that the ramp-up of its Styldrift mine, which came on­line last year, on­go­ing cash gen­er­a­tion of BRPM and the Im­pala roy­al­ties would sup­port sus­tain­able div­i­dend pay­outs.

“This com­pany will stand or fall on the suc­cess at Styldrift. It can­not be an ex­pen­sive mine, as it is a mech­a­nised mine,” Phiri said.

“We will be re­ly­ing on the plat­inum group met­als (PGM) bas­ket price. How­ever, re­ly­ing on the bas­ket price is not enough.

“It is about the ef­fi­cien­cies we im­ple­ment. I am con­fi­dent that the team is on top of it.”

The group recorded a 106.6 per­cent in­crease in rev­enue to R7.4bn from R3.6bn in 2018 after the in­clu­sion of the Styldrift mine and the im­proved macro en­vi­ron­ment boosted the bal­ance sheet.

The listed PGM ju­nior rode the wave of the strong pal­la­dium and rhodium prices and the weaker rand, which con­trib­uted to head­line earn­ings a share more than dou­bling to 50.4 cents.

Net debt was slashed by 41 per­cent to R491.3 mil­lion, and earn­ings be­fore in­ter­est, tax­a­tion, de­pre­ci­a­tion and amor­ti­sa­tion in­creased by a whop­ping 248.4 per­cent R1.7bn in 2018 from R504.1m in 2018.

RBPlats re­ceived a 36.8 per­cent in­crease in the bas­ket price per plat­inum ounce to R28 743 in 2019 from

R21 005 a year ear­lier.

The group said it now owned 100 per­cent of its mines after ac­quir­ing the re­main­ing 33 per­cent from An­glo Amer­i­can Plat­inum last year.

It set­tled the R1.8bn pay­ment re­lated to the BRPM ac­qui­si­tion, us­ing pro­ceeds from the gold stream­ing agree­ment with Triple Flag Min­ing Fi­nance Ber­muda.

An­chor Cap­i­tal in­vest­ment an­a­lyst Seleho Tsatsi said the div­i­dend was pos­i­tive for share­hold­ers. He said the fact that the stock traded lower on the JSE was an in­di­ca­tion that the mar­ket was ex­pect­ing bet­ter re­sults.

“RBPlats is the only plat­inum min­ing com­pany that is down this morn­ing.

“Judg­ing by the 2 per­cent weak­ness in the share price, the mar­ket was ex­pect­ing bet­ter from the com­pany,” said Tsatsi.

| African News Agency (ANA)

ROYAL Bafo­keng Plat­inum chief ex­ec­u­tive Steve Phiri.

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