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Amplats declares R3bn interim dividend as earnings soar 82%

Amplats CEO Chris Griffith

Amplats CEO Chris Griffith

Photo by Creamer Media

22nd July 2019

By: Martin Creamer

Creamer Media Editor

     

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JOHANNESBURG (miningweekly.com) – Platinum group metals (PGM) mining and marketing company Anglo American Platinum (Amplats) on Monday declared an interim dividend of R3-billion after achieving another strong financial performance in the first half of the year on the back of robust market fundamentals and an 82% surge in earnings before interest, taxes, depreciation and amortisation (Ebitda).

In terms of the company’s employee share ownership scheme, each employee will this year be paid R4 000 cash plus R4 000 in shares.

The good performance was accompanied by an improvement in the overall safety performance of the business, reflecting management’s commitment to ensuring safe production while delivering value.

“Thanks in part to strong fundamentals for the PGM basket price, we have increased Ebitda by 82% to R12.4-billion, resulting in an increase in the Ebitda margin to 32% and doubling our return on capital employed to 45%,” said Amplats CEO Chris Griffith in a release to Mining Weekly Online.

The company benefited from much stronger global prices for the basket of PGMs, particularly palladium and rhodium, and from a weaker rand against the dollar.

Operational performance was steady despite Eskom power outages and an unprotected strike at Mototolo mine, and a stronger operational performance is expected in the six months to end December, when a temporary increase in work in progress inventory should be largely refined.

Despite this temporary increase in inventory, the company generated operating free cash flow of R4.3-billion.

Amplats, which succeeded in delivering safe, responsible and profitable first-half production, is committed to eliminating fatal incidents on a permanent basis and ensuring safe operations, while delivering leading returns in the PGM industry.

“What the company has already been able to demonstrate is a material reduction in fatalities over a number of years,” Griffith said in response to Mining Weekly Online.

Ten to 15 years ago, the company averaged 25 to 30 fatalities a year.

“We’ve been able to introduce engineered safety solutions and reposition the portfolio such that we’re a substantially safer company than we ever have been. That journey continues and we believe that we're now getting to the level a reduction in incidents and finally getting every employee in the business to really believe that the elimination of fatalities is a possibility,” he added.

The company has maintained its production outlook for the full year of 4.2-million to 4.5-million PGM ounces (excluding toll material), with PGM sales volumes expected to be in line with refined production of 4.6-million to 4.9-million PGM ounces.

The medium-term outlook for PGMs remains positive thanks to robust demand fundamentals for the group of metals, with sharply higher dollar metal prices for palladium and rhodium offsetting lower platinum prices.

The directors approved the declaration of an interim gross cash dividend of R11 a share on the ordinary shares from profits accrued during the six-month period ended June 30, in line with the dividend policy of 40% pay-out ratio of headline earnings.

The dividend will be subject to a dividend withholding tax of 20% for all shareholders who are not exempt from or do not qualify for a reduced rate of withholding tax. The net dividend payable to shareholders subject to withholding tax at a rate of 20% amounts to 880.00 cents a share.

In Zimbabwe, the Unki platinum mine had record first-half production and CFO Craig Miller reported that there had been no currency disruption.

Zimbabwe’s currency change, he said, had both positives and negatives to Amplats, the positives being that as the company translated a portion of its US dollars into local currency, market related rates were being achieved as opposed to the one-to-one translation previously.

“However, we do see the impact on inflation coming through, not necessarily into our accounts, but it is something we’ll monitor particularly as it relates to the wages of our employees,” Miller added.

Griffith said there had been no disruption to electricity supply in Zimbabwe in the arrangement of buying power directly from the national provider.

Amplats is out to tender for 75 MW of solar power at Mogalakwena in South Africa and is looking to a potential solar plant at Unki and the Amplats processing operations.

Edited by Creamer Media Reporter

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