JOHANNESBURG (miningweekly.com) – Mining company Impala Platinum (Implats) on Tuesday announced its placing of new shares to raise up to R4-billion through a bookbuild offering run by UBS as acting underwriter.

This follows Mining Weekly Online’s report last month in which Implats CEO Terence Goodlace outlined the company’s revised action plan for sustainable profitability in a “lower for longer” metal price environment.

The action plan takes in cuts in working costs and capital expenditure as well as an acceleration of the repositioning of the principal operations at the Impala mine, north of Rustenburg, on the western limb of the Bushveld Complex.

The includes the completion of the large 16 Shaft and 20 Shaft replacement projects within the Impala lease area at a cost of R3.9-billion over the next three years.

These new shafts will replace production from the older shafts as they are mined out and closed and in so doing improve infrastructure use and smelter efficiency.

Implats stated in a Johannesburg Stock Exchange News Service announcement that the share placing should allow it to operate profitably n both the short and long term.

The company said that the placing, through an accelerated bookbuild process to qualifying investors only, did not constitute an offer to the public to buy shares.

The share price will be decided at the close of the bookbuild.

The share sale move is backed 49% by Coronation Fund Managers, Royal Bafokeng Holdings and the State-owned Public Investment Corporation, with Allan Gray irrevocably committing 2.6% through client recommendation.

Implats, which has already spent R14-billion on the 16 Shaft and 20 Shaft projects, is earmarking 8 Shaft for closure as well as the mechanised portion of 12 Shaft.

“We do need, at this time, all shafts to contribute to the group,” Goodlace told Mining Weekly Online.

The mechanised section of 12 Shaft was off the productivity levels the company was achieving at its mechanised Two Rivers and Zimplats operations.

Eight Shaft, which no longer has much reserve left, is mining on its extremities, which prolongs travelling times.

“We would have depleted it over the next two years. Now, because of where it finds itself on its own cost curve, it’s no longer viable,” Goodlace explained.

Owing to the expectation of platinum group metals (PGM) prices remaining depressed in the short term, the company passed its dividend to focus on shorter-term cash preservation and profitability within a low-price environment to enable the operations to be cash-flow positive at current prices before replacement and development capital.

CHEAPER OUNCES

Even at this early stage, 20 Shaft is already the fourth cheapest cost producer within Implats’ Rustenburg lease.

The new shafts, which are already producing PGMs, offer the advantage of concentrated mining areas and short travel distances. They bring more Merensky to the fore and ultimately they will give Implats the opportunity going into 2020 to reduce the overhead costs associated with operating 14 shafts rather than ten shafts.

The company currently targeted a significantly reduced cost of below R19 000 a platinum ounce, compared with the R22 000 per platinum ounce in the 12 months to June 30.

Goodlace emphasised that social and labour plan expenditure of R200-million this year would not be cut and the company’s plan to build 2 420 houses remained on track.

Its 557-house first phase of the programme to accommodate employees has been completed and the board has approved the next phase involving another 550 houses.