Implats half-year results covered by Mining Weekly’s Martin Creamer. Video editing: Darlene Creamer.
Platinum group metals (PGMs) mining and marketing company Implats benefitted from strong demand for its primary products in the half-year to December 31, amid a robust rand PGMs pricing environment, which mitigated the financial impact of broad-based inflationary pressures, the JSE-listed company said on Thursday.
The company has allocated R4.3-billion over the next five years to energy security and decarbonisation.
Half-year gross profit was R17.2-billion, with earnings before interest, taxes, depreciation and amortisation at R24.5-billion and headline earnings at R14-billion.
Free cash flow of R11-billion generated after funding capital expenditure (capex) of R4.9-billion, and 36% of free cash flow was allocated to shareholder returns.
South African processing assets were constrained by the timing of scheduled maintenance and the increased severity and frequency of load curtailment. In total, an estimated 9 000 six-element (6E) ounces of mined volumes were foregone and 38 000 6E ounces of refined production deferred owing to power constraints during the period.
“The benefits of our geographically diverse production footprint and maiden contributions from our suite of growth projects countered the challenging global macro-economic and operating environment, which was typified by high inflation and intensified utility-level power constraints in South Africa. Operating momentum was sustained during the period, and there was limited direct impact on mined volumes from escalating load curtailment in South Africa,” said Implats CEO Nico Muller.
“Rand PGMs pricing remains robust and we are well positioned to pursue our capital investment programme and sustain attractive shareholder returns. The operational focus for the remainder of this financial year is on ensuring stability at our South African mining and processing assets during an expected period of inflationary pressure and more persistent load curtailment, and recommissioning the refurbished Number 4 smelter at Impala Rustenburg,” said Muller, who emphasised the company’s commitment to rigorous stakeholder engagement as it navigated the changeable socio-economic environment in South Africa and Zimbabwe and pursued a successful conclusion to its proposed acquisition of a majority stake in Royal Bafokeng Platinum.
The company’s social performance projects benefitted 130 000 people.
Rand revenue per 6E ounce sold increased by 5% to R38 117/6E oz sold as PGM markets tightened on demand recovery and constrained supply going into 2023.
Concentrate production at managed operations at Impala Rustenburg, Impala Canada, Zimplats and Marula increased by 2% to 1.18-million 6E ounces, with 6E concentrate production from joint venture operations, Two Rivers and Mimosa, remaining unchanged at 270 000 oz.
Third-party 6E receipts of 169 000 oz were 10% lower than those in the prior comparable period, with several operational challenges reported at peer group producers, including load curtailment and severe weather events. In total, 6E-in-concentrate volumes produced were stable at 1.62-million ounces.
Group refined production of 1.48 million 6E ounces, including saleable production from Impala Canada, declined by 9%. Smelting capacity was constrained by increased load curtailment and the scheduled rebuild of the Number 4 Furnace in Rustenburg, which started in late November 2022. Implats ended the period with 140 000 6E ounces of excess inventory compared with none in the corresponding 2021 period.
Notable rand depreciation resulted in additional inflationary pressures, compounding the impact of high energy and consumables pricing on the translated cost and capex at the Zimbabwean and Canadian operations. Total cash operating costs increased by 15%, while unit costs were further impacted by lower refined production and, on a stock-adjusted basis, increased by 15% to R19 346/6E ounce.
Capex at managed operations rose by 39% to R4.9-billion as expenditure on replacement and growth projects accelerated and the rand weakened against the dollar. Stay-in-business spend of R3.2-billion, replacement capital of R1.1-billion and expansion capital of R0.7-billion increased by 15%, 88% and 191%, respectively.
Implats has six mining operations and its toll-refining business, Impala Refining Services. Its mining operations span the Bushveld Complex in South Africa, the Great Dyke in Zimbabwe and the Canadian Shield and include Impala Rustenburg, Zimplats, Marula, Impala Canada’s Lac des Iles, Mimosa and Two Rivers. The group’s head office is in Johannesburg.
Implats employs more than 56 000 people across all operations and metals produced are key to contributing to a cleaner, greener world. Implats actively develops markets for its PGM products, which are sold in South Africa, Japan, China, the US and Europe.