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Implats delivers strong safety and operational performance

The Implats Group has delivered a strong safety and operational performance for the half‐year ended 31 December 2018 and a return to profitability and cash generation.

Good progress was made on implementing key outcomes of the Impala Rustenburg strategic review.

The period saw a higher PGM rand basket price ‐ boosted by significant increases in palladium, rhodium and nickel, and aided by a weaker US$ exchange rate.

These factors, combined with the strong Group‐wide operational performance, resulted in headline earnings per share increasing to 310 cents from a loss of 21 cents in the prior interim period.

Financial highlights

  • Revenue was 36% higher at R23.5 billion, due to increased sales volumes, improved dollar metal prices and a weaker exchange rate
  • Rand revenue per platinum ounce sold increased by 16% to R30 118.
  • EBITDA rose 112% to R5.9 billion (H1 FY2018: R2.8 billion)
  • Basic earnings were up to R2.3 billion from a loss of R163 million in the prior comparable period
  • HEPS increased to 310 cents per share from a loss of 21 cents per share.
  • All operations, other than Marula, contributed positively to headline earnings
  • Group capital expenditure reduced by 10% to R1.7 billion as replacement spend at Impala Rustenburg slowed
  • Group operating costs were well controlled with unit costs per tonne milled flat at R1 049 per tonne, and unit costs per platinum ounce refined, on a stock adjusted basis, reducing slightly to R22 715 per ounce

Safety overview

Regrettably, an employee at Impala Rustenburg 16 Shaft suffered fatal injuries in September 2018.

Notwithstanding this tragic incident, the Group effected a step change in safety performance. Fatal injuries reduced from six in the prior comparable six‐month period, to one in the period under review.

The recent incident followed a seven‐month continuous fatality free work period – a Group record.

During calendar year 2018 the Group achieved the lowest fatality frequency rate amongst its peers and recorded the lowest‐ever fatal injury frequency rate (FIFR) of 0.019 per million man hours worked over the period.

The lost‐time injury frequency rate (LTIFR) improved 15% over the six months to 5.12 per million man hours worked.

Operational overview

Implats CEO Nico Muller comments:

“The Group achieved encouraging period‐on‐period operational improvements in key areas over the past six months.”

“Tonnes milled from managed operations (Impala Rustenburg, Zimplats and Marula) increased 3% to 10.2 million tonnes (H1 FY2018: 9.9 million tonnes), which together with contributions from our joint ventures at Mimosa and Two Rivers sustained mine‐to‐market platinum production in concentrate at 678 000 ounces.

“Notwithstanding, gross platinum in concentrate production reduced by 11% to 775 000 ounces principally as a result of a 49% reduction in third‐party receipts, in line with market guidance, and as a result of a large once‐off toll‐refining contract concluded in the prior comparable period.”

Gross refined platinum production for the six months improved by 10% to 799 800 ounces, compared to 726 700 last year assisted by the draw-down of some processing inventory during the period, compared to a build‐up following scheduled furnace maintenance in the comparable period a year ago.

Impala Rustenburg: A vastly improved safety performance at the Impala Rustenburg operations facilitated a stable and productive operating period.

Tonnes milled increased by 5% to 6.0 million tonnes (H1 FY2018: 5.7 million tonnes), with higher volumes from eight of the ten shafts in production,
including the development shafts.

These improvements more than offset the loss of production from 4 Shaft, which closed in January 2018, lower volumes from 1 Shaft (where a planned ramp‐down in production is underway) and 11 Shaft (where poor geology impacted volumes in the period).

Impala Refining Services (IRS): IRS once again contributed significantly to the Group’s bottom line, despite higher concentrate receipts in the previous comparable period as higher basket pricing and competitive processing costs bolstered profitability.

Zimplats: Zimplats sustained its operational performance and achieved a safety milestone of 9.75 million fatality free shifts. Tonnes milled of 3.3 million tonnes were consistent with the prior period, (H1 FY2018: 3.3 million tonnes), with all mining units delivering to plan.

The current economic challenges in the country are being monitored closely.

Marula: Marula continues to deliver an improved operational performance after ongoing efforts to sustain operational continuity.

Tonnes milled increased by 1% to 955 000 tonnes (H1 FY2018: 941 000

Mimosa: Mimosa sustained a strong production performance in line with its design capacity. Tonnes milled were maintained at 1.4 million tonnes.

Two Rivers: Two Rivers’ mill grade continued to be impacted by mining low‐grade split‐reef areas and production was also impacted by community disruptions. Tonnes milled decreased 3% to 1.7 million tonnes.

Execution of Rustenburg strategic review

Muller says: “The Group continues to make strides towards eliminating loss‐making production, which culminated in the decision to restructure Impala Rustenburg.

“The implementation of the Impala Rustenburg plan is being phased in over two years to ensure the transition occurs in a socially responsible way. This plan is expected to deliver a safer and more profitable Impala Rustenburg centred on assets which access a higher quality, long‐life ore-body with lower operating costs and capital intensity.

“The implementation of the restructuring is governed by the overriding imperative to ensure that forced job losses are minimised through various avoidance measures. These include the transfer of employees to vacant positions at the 16 and 20 growth shafts, natural attrition, reskilling, voluntary separation, business improvement initiatives and exploring commercial options to exit shafts that do not fit the long‐term portfolio.

“A multitude of stakeholder engagements were undertaken during the reporting period, all of which were constructive. We continue to engage with the union, government and community leadership to safeguard employment opportunities as far as possible through the restructuring process.”