JOHANNESBURG (miningweekly.com) – Ongoing improvements in the platinum group metals (PGMs) market have prompted miner Impala Platinum (Implats) to re-evaluate the strategic direction with regard to its Impala Rustenburg operations.

Following a review of the Impala Rustenburg operations, Implats in August 2018 said it would reduce the number of operating shafts from ten to six by the end of the 2021 financial year. It advised at the time that that would result in output from Impala Rustenburg decreasing from about 750 000 oz/y to about 520 000 oz/y, while employee numbers would decrease by about 13 000 to 27 000.

Implats CEO Nico Muller on Thursday said market conditions continued to improve and that some of these shafts still had significant reserves left to mine. Thus, the company was now considering outsourcing some of these shafts to interested parties, instead of selling them.

The PGMs miner, which swung to a profit in the financial year ended June 30, on the back of higher PGM basket prices, said performances from 14 Shaft and 12 Shaft had markedly improved in the reporting year, with 12 Shaft contributing to free cash flow.  

Nine Shaft, meanwhile, remains up for sale, owing to dwindling reserves, while 1 Shaft is estimated to have about four years of mine life left, should it become commercially attractive for Implats to retain the shaft.

Muller confirmed that, during the first phase of the restructuring of the Rustenburg operations, the company had only retrenched 117 people.

The company endeavours to lower overhead costs, while mitigating job losses as far as possible. These mitigation measures include reskilling employees and transferring them to other operations, as well as offering voluntary separation packages.

Currently, employees are being reskilled and transferred to 1 Shaft, which is being managed by a mining contractor.

“Our end-game remains to ensure that the Rustenburg operations become sustainable and profitable,” Muller said.

Meanwhile, Implats had progressed the construction of Impala Rustenburg’s 20 Shaft during the reporting year, while the 16 Shaft project had reached 92% completion at year-end.

The company was focusing on creating the required mineable face length to complete the production ramp-up.

RESULTS
The improving market conditions and PGMs basket price allowed Implats to achieve a positive net cash flow of R10.7-billion for the financial year.

The company reported a five-fold, or R5.7-billion, improvement in gross profit to R6.8-billion for the financial year, compared with the R1.1-billion gross profit achieved in the financial year ended June 30, 2018.

The average price achieved for platinum was $827/oz, which was 12% lower than the prior year, while the average price achieved for palladium was $1 185/oz, which was a 22% improvement on the prior year.

Additionally, the average price achieved for rhodium was $2 568/oz, which was 71% higher than in the prior year, while the average price achieved for nickel was $12 649/t, which was 10% higher than in the prior year.

Earnings before interest, taxes, depreciation and amortisation improved by 90% to R10.5-billion, compared with the prior financial year.

Headline earnings increased to R3.04-billion, or 423c a share, in the reporting year, compared with a R1.23-billion, or 171c a share, loss in the prior year.

Muller said the extra cash generated in the reporting year would be used to improve the company’s balance sheet by reducing debt, including debt due in 2020. Implats also successfully incentivised the early conversion of its 2020 $250-million convertible bonds, which further improved balance sheet flexibility.

Implats in the reporting year produced 3.1-million ounces of refined PGMs, which is a 5% improvement on the prior year. Production included 1.53-million ounces of refined platinum and 910 000 oz of refined rhodium.

“The company delivered stable mine-to-market platinum concentrate volumes of 1.31-million ounces, despite a challenging operating environment, which included community disruptions at Marula, in the Bushveld Complex, the impact of split-reef mining at Two Rivers, also in the Bushveld Complex, intermittent load-shedding, and continued political and economic uncertainty in Zimbabwe,” explained Muller.

He added that costs had been well controlled in the reporting year, with unit costs having increased by 4% on a stock-adjusted basis to R23 942/oz platinum, while volume gains helped to offset persistent inflationary pressures from rising labour and utility costs.

Muller confirmed that, given the uncertain and volatile local and global economic outlook, as well as the ongoing restructuring under way at Impala Rustenburg, the board resolved not to declare a dividend for the reporting year.

Muller added that the company would consider dividends in another 12 to 15 months, if favourable market conditions continue and depending on the progress of the restructuring.

Implats expects to produce between 1.45-million and 1.55-million ounces of refined platinum for the year ending June 30, 2020.