Operating costs surging to R5.6bn are hurting RBPlats’ share price
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.
ROYAL Bafokeng Platinum chief executive Steve Phiri.