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RBPlat reports that its EBITDA has more than doubled to R525.6 million and its platinum output has risen 21.3% in its six month results ended 30 June 2019.

Royal Bafokeng Platinum (RBPlat) CEO Steve Phiri emphasised the company’s strategic objective of creating value through competitive earnings and growth.

He states:

To this end, our operational focus and key objectives remain geared towards:

  • achieving meaningful and sustainable improvements in our key safety metrics in our pursuit of zero harm
  • maintaining stable stakeholder relations through ongoing dialogue and interaction with employees, National Union of Mineworkers (NUM) structures and local communities
  • successfully ramping up Styldrift to 230 ktpm during the third quarter of 2020 and further leveraging our operational flexibility

Key features of the period

  • EBITDA more than doubles to R525.6 million
  • Fixed cash costs reduced from 70.8% to 69.1%
  • Rights offer raises R1.029 billion
  • Platinum output 21.3% up to 129.2 koz
  • Styldrift ramp-up slower than planned but tonnes milled 86.5% higher
  • Total tonnes milled 22.2% higher
  • Mixed safety performance for the period

Read more about platinum group metals here

Production

Although the ramp-up at Styldrift was slower than planned, Styldrift’s contribution supported the overall production results, with 4E and Pt ounces increasing by 21.1% and 21.3% respectively to 199.2koz and 129.2koz.

BRPM performed satisfactorily, with overall operational flexibility being maintained despite the ongoing depletion of South shaft Merensky reserves. UG2 mining was successfully reinstated at South shaft and is being ramped up to 20 ktpm.

Delays at Styldrift were associated with the commissioning of in-stope ore handling infrastructure, operational challenges encountered during the implementation of full calendar operations (FULCO) and difficulties experienced in recruiting and onboarding of skilled, trackless personnel.

Operational and technical teams continue to focus on systems, installation of infrastructure and recruitment of personnel required to achieve steady state production of 230ktpm.

In support of the Styldrift ramp-up and the additional UG2 mining volumes anticipated from South shaft post 2020, we have initiated a number of projects and studies to increase both milling and tailings storage capacity.

These include the Maseve MF2 (160ktpm/200ktpm) upgrade and the Maseve and BRPM tailings storage facility (TSF) upgrades.

Financial performance

The loss per share of 70.8 cps recorded at the end of the period (H1, FY2018 12.4cps) was attributable to the high cash costs and high levels of depreciation owing to the Styldrift ramp-up, interest charged on the deferred RPM payment and high borrowing costs expensed in 2019.

The inclusion of revenue from Styldrift and improved markets contributed to a 90.6% increase in revenue to R3 163.0 million for the period, compared to R1 659.6 million in the 2018 comparative period.

A 23.5% increase in the basket price per platinum ounce over the period to R24 693.5, resulted in platinum accounting for 41.3% of revenue in the period.

Once again, rand revenues were boosted by the weakening of the South African currency against the US dollar.

Despite the decline in the company’s overall gross profit to R48.9 million, the BRPM operation achieved 140.3% growth in gross profit to R356.3 million.

Total cash operating costs increased by R1 289 million to R2 631 million when compared to the first six months of 2018 mainly due to Styldrift reaching commercial operating status and its costs no longer being capitalised.

However, the fixed cost component of our cash costs has improved to 69.1%, as opposed to 70.8% in the comparable period last year.

Total capital expenditure for the period under review was 55.0% lower than last year at R621 million, reflecting predominantly Styldrift’s newly won commercial operating status and the near completion of Phase III at BRPM.

Projects

BRPM North shaft Phase III replacement project

The project entails the extension of the North shaft Merensky decline access infrastructure and associated reef infrastructure from level 10 to the mine boundary at level 15.

In line with the anticipated completion of the project in the ensuing half-year period, capital expenditure declined to R6 million for the H1. Total project expenditure to date is R1 126 million.

Styldrift ramp-up (expansion project)

The primary objective during the reporting period was ore reserve development and infrastructure establishment required to achieve the 230 ktpm milestone by the third quarter of 2020.

The operational team has been focused on securing operational stability to achieve, sustain and leverage the operating efficiencies and cost benefits associated with mechanised mining.

Notwithstanding the slower than planned performance during the first six months, ongoing improvements in all key operating metrics are being realised and we remain confident that Styldrift will achieve its promised operational and cost benefit commitments at steady state.

Capital expenditure on the project for the first half of the year amounted to R536 million bringing total capital expenditure for the project to date to R12.34 billion.

Outlook

Consolidating the gains made in our key injury frequency rates is a major objective in the second half of the year, in support of creating a zero harm operating environment.

Key drivers to optimising volumes, containing costs and securing long-term operational flexibility are the following:

  • Successfully concluding wage negotiation
  • Continuing with development and construction activities to support the Styldrift 230 ktpm milestone
  • Ensuring South shaft UG2 achieves its target of 20ktpm by the fourth quarter of 2019
  • Progressing the projects related to the various concentrator upgrades required to support longer-term steady state milling capacity requirements
  • Maintaining strict operational and capital cost control and management

Production guidance for the full year is revised to 3.9 Mt – 4.0 Mt at a built-up head grade of 4.00 g/t – 4.10 g/t (4E) due to the slower than forecast ramp-up at Styldrift, partially compensated by increased BRPM tonnage, yielding 4E metal production of between 430 koz and 440 koz.

Group capital expenditure is forecast to remain unchanged at approximately R1.7 billion.

South African PGM supply is expected to increase marginally from current levels.

A surplus is likely to remain in the platinum market in 2019.

However, we expect a PGM deficit as a result of continuing deficits in the palladium market.