No dividend as Implats returns to profit


No dividend as Implats returns to profit

Published Date: 2019-09-06 | Source: Stephen Gunnion | Author: Stephen Gunnion

No dividend as Implats returns to profit

The platinum producer blames uncertain and volatile conditions and the ongoing restructuring of its Rustenburg mines.

Impala Platinum isn't paying a full-year dividend despite a strong turnaround in its performance over the past year. Releasing results yesterday, the platinum producer said due to the uncertain and volatile local and global economic conditions and the ongoing restructuring of its Rustenburg operations, it decided to hold back on a payout.

The group said a strong operational performance allowed it to benefit from better market conditions and the rising rand price for platinum group metals (PGMs). Free cash flow generation improved and it returned to a net cash position at year-end.

It delivered stable mine-to-market platinum concentrate volumes of 1.31 million ounces for the year to end-June. That was despite a challenging operating environment which included community disruptions at the Marula mine in Limpopo, the impact of split-reef mining at Two Rivers, intermittent load shedding by Eskom and continued political and economic uncertainty in Zimbabwe. Refined PGM production rose 5% to 3.1 million ounces, with refined platinum up 4% to 1.53 million ounces and palladium increasing by 7% to 0.91 million ounces.

It said higher sales volumes were delivered into strong rand PGM prices, resulting in a significantly improved financial performance. Revenue rose 36% to R48.6 billion and gross profit increased five-fold to R6.8 billion. Headline earnings of R3 billion transacted to 423c per share, from a 171c loss last year.

Cash generation improved to R10.7 billion, yielding R7.7 billion in positive free cash flow after capital investments of R3.9 billion. After paying down debt, it had a net cash position of R1.1 billion. Due to the strong cash generation and a big rise in its share price, it decided to induce early conversion of its $250 million convertible bonds in July.

The group said its focus for the year ahead would be to advance the phased restructuring of Impala Rustenburg, while taking advantage of the operational improvements realised over the past year. It estimates group refined production of 1.45 million to 1.55 million ounces for its 2020 financial year at operating costs of between R25,500 and R26,500 per platinum ounce.

The restructuring of Impala Rustenburg is aimed at making the mine more competitive and sustainable by focusing its its better-quality, long-life ore bodies. It has already reduced employees by 1,300 and plans to cut numbers even more. There have been only 117 forced retrenchments. It now plans to outsource mining operations at its 1 Shaft and close Shaft 9. It expects restructuring costs of R1.6 billion this year.

Its shares reversed early gains to close 0.9% down at R85.60.

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