Platinum group metals (PGMs) miner Impala Platinum has warned that its earnings per share (EPS) and headline earnings per share (HEPS) for the financial year ended June 30 are likely to be at least 20% lower year-on-year as a result of weaker PGM prices.

The company, which acquired control of Royal Bafokeng Platinum (RBPlat) during the financial year, posted EPS of R38.56 and HEPS of R38.53 for the 2022 financial year.

Implats expects to publish its financial results on or about August 31. Its financial results for the period will include the consolidation of RBPlat’s results from June 1 this year, including the subsidiary’s R4.5-billion cash balance.

Implats ended the financial year with a cash balance of R26.8-billion. 

It says the operating environment in the 2023 financial year was typified by continuing headwinds, with regional power constraints having provided a notable impediment to operational continuity and delivery.

“While input pricing across key consumables eased in the latter half of the financial year, rand depreciation persisted. This limited the benefit to our South African operations, and adversely impacted the translated dollar cost and capital base of our Zimbabwean and Canadian assets.” 

Group-wide six-element (6E) PGMs production increased by 2% to 3.25-million ounces, from the 3.19-million ounces produced in the prior financial year. 

Production from managed operations increased by 6% to 2.42-million ounces of 6E.

Impala Rustenburg increased production by 3% to 1.23-million stock-adjusted 6E ounces despite the severity and frequency of load curtailment impacting operational continuity. 

Zimplats benefitted from the commissioning of the third concentrator at the end of the first quarter of the financial year and, despite the impact of lower grade and regional power disruptions, delivered a 5% increase in 6E matte production to 611 000 oz.

Operating momentum at Marula was negatively impacted by sporadic community unrest in the second half of the period. This was compounded by the impact of load curtailment resulting in a 7% decline from the record production achieved in the 2022 financial year, to deliver 6E concentrate production of 241 000 oz.

Impala Canada delivered a 17% gain in 6E concentrate production to 291 000 oz, with increased throughput of higher-grade underground ore. 

A maiden contribution of 43 000 oz of 6E in concentrate from RBPlat was also recorded for the 30 days to June 30.

Further, Implats notes that production from joint ventures (JVs) declined by 1% to 541 000 6E oz.

“Two Rivers recorded a 2% decline in 6E in concentrate production to 295 000 oz owing to safety stoppages, intermittent localised community and power disruptions, and the ongoing impact of split-reef and development tonnage on milled grade. 

“At Mimosa, 6E-in-concentrate volumes declined by 1% to 245 000 oz. Processing and plant stability was impacted by the commissioning and optimising of the concentrator project, power interruptions, changes in reagent supply and poor water quality.”

Concentrate receipts from third parties declined by 18% to 287 000 6E oz, with several operational challenges reported at peer-group producers and the termination of two contracts in the third quarter of the 2023 financial year.

The group manages the lower stages of load curtailment by reducing power to its furnaces and concentrators, with mining and hoisting volumes impacted at higher stages.

These mitigating actions result in a combination of “foregone” and “deferred” production volumes.

“In addition to load curtailment at South African-managed and JV operations during the period, severe loadshedding was experienced across the Zimbabwean national grid in March this year, while operations at Mimosa were impacted by further intermittent power outages in May and June.

“In total, the Group estimates circa 36 000 6E oz of production were foregone across Southern African-managed and JV operations during the period, of which 28 000 6E oz and 8 000 6E oz were attributable to Impala Rustenburg and the Zimbabwean operations, respectively.

“About 101 000 6E oz were deferred as a result of power constraints at the Group’s smelting operations and the consequent delay to restart the refurbished Number 4 furnace in the fourth quarter of the 2023 financial year. A further 10 000 6E oz were deferred owing to cable theft at Impala Rustenburg, particularly the instance which resulted in power supply interruptions to the metallurgical complex.”

Gross refined and saleable volumes declined by 4% to 2.96-million ounces of 6E, and Implats ended the 2023 financial year with excess inventory of about 245 000 oz. 

Sales volumes declined by 6% to 2.97-million ounces, with limited destocking of refined metal inventories from an already reduced 2022 financial year base. Softer dollar basket pricing was partially offset by the rand exchange rate weakening by 16%, resulting in a 4% decline in group sales revenue to about R36 120/oz sold. 

Group capital expenditure is expected to have increased to about R11.5-billion from R9.1-billion in the comparative period, owing to higher levels of stay-in-business and replacement spend, and rand depreciation.

Implats incurred growth capital of about R1.9-billion in the 2023 financial year.

Group unit costs per 6E oz are expected to increase to about R19 840 on a stock-adjusted basis owing to persistent inflationary pressures, which were exacerbated by the impact of rand depreciation on the translated dollar cost base of Zimplats and Impala Canada.