Impala Platinum (Implats) CEO Nico Muller said yesterday that the miner would not slash production due to the drastic fall in platinum group metal (PGM) prices, but said the newly acquired Royal Bafokeng Platinum (RBPlat) needs dedicated attention.
Speaking to journalists in a round-table discussion of the company's results, Muller said: “I don't think any major restructuring or suspension of operations is something that's going to happen within the near term.
“I think we've got a number of other options available to us. We also won't stop operation. If you have a loss on one day, or one month, we would have to have a direction that suggests the inevitability of continued negative cash flows in order for us to make such a big decision because stopping or suspending an operation or restructuring has a material impact. We won't support loss-making. It's not something that we will do over a cup of coffee,” he said.
Muller said RBPlat would require attention and the mine was a quality resource.
“The deal was premised on a shallow, mechanised, productive, safe, low cost, and low capital business. What has transpired over the last year is that they were in particular constraints in the processing throughput as well as recovery and with the ramp-up of stakeholders and as a consequence of that, the cost increases of that business have been high double digits.
“When I look at operations that are at risk, certainly RBPlat is going to require a lot of attention in order to get the cost of operation to the position that we aspire to when we made the offer for the company 18 months ago,” he said.
Implats was in the running to acquire RBPlat with Northam, which it eventually won. Northam Platinum exited the race and sold its shares to Implats.
Muller said: “I think Northam made a prudent decision at the right time. We think that it's a decision that served the company, and the shareholders well, and, in my view, it served the industry because it provides sustainability for a very critical PGM-producing region. I think it was a smart decision after 18 months and I think sanity prevailed in the end,” he said.
Implats released its results for the financial year that ended June 30, 2023, yesterday and reported an almost 63% decrease in dividends after lower revenues and higher costs of sales.
Its final dividend for the reported period amounted to 165c, or R1.49 billion down from R8.9bn.
The group said revenue decreased by 10% to R106.6bn amid a 5% decline in sales volumes. A 17% fall in dollar metal prices was partially offset by a 13% weaker rand exchange rate.
Muller said the company was surprised by the speed with which PGM prices had declined, especially in the second half of the firm’s financial year.
The average revenue per ounce sold dropped by 4% in rands as a 16% depreciation of the rand against the dollar price dropped. Palladium and rhodium were down 20% and 28%, respectively.
“Enhanced operational flexibility, resilience, and disciplined execution enabled Implats to successfully navigate a series of domestic and regional challenges, which compounded the effects of softening dollar pricing, rand depreciation, and persistent inflation in the year under review. This is a testament to the skills and strength of our people, with stand-out performances at Impala Canada, Zimplats, and Impala Rustenburg,” the group said.
Looking ahead, Implats said group production in the 2024 financial year will be supported by volume gains from increased milling capacity at Zimplats and Two Rivers, while the improved operational stability established at Impala Rustenburg and Impala Canada bodes well for further efficiency gains.
“Concentrate volumes from RBPlat will materially alter the production profile for the group. Refined volumes will be impacted by the planned rebuild of Number 5 furnace, with Group sales in line with refined and saleable production,” it said.
BUSINESS REPORT