Implats' 20 Shaft headgear
Impala Platinum (Implats) increased is refined platinum production by 12.5% producing 778 500 oz for the group during the second half of 2016.

Reporting the financial and operating results for the six months ended 31 December 2016, Implats cited good cost management and robust cast flows from Impala Refining Services (IRS) as the reason for this.

“The first half of our financial year 2017 has been characterised by an ongoing strategic response to the challenging operating conditions, specifically at Impala Rustenburg, and the persistently low price environment,” says Implats acting CEO Gerhard Potgieter.

“Our aim is to ensure Implats can sustain optimal levels of safe production at best possible cost, with significant strategic optionality for positioning the group advantageously for stronger future PGM prices.”

Zimplats, Two Rivers, Mimosa and IRS all delivered good operational performances, while difficult operating environments “challenged” the performance at both Impala Rustenburg and Marula, said Implats.

The higher gross refined platinum production was largely due to a lock‐up of platinum to accommodate planned furnace maintenance at the Rustenburg smelters in the previous comparable period, according to the company.

Group revenue of R18.2 billion was R1.4 billion or 8.3% higher, and cost of sales at R18.5 billion increased by R1.7 billion.

Implats however recorded a significant gross loss for the period of R318 million compared to a much smaller R40 million loss in the first half of the year.

The company’s headline loss per share also declined to 71 cents.

Implats said improved platinum price performance resulted in revenue per ounce increasing 9.3% to $1 775, and the 4.5% depreciation in the South African Rand benefited the rand revenue per platinum ounce, which rose 14.1% to R24 921.

Meanwhile, the cash generated from operations – before changes to working capital – was R1.8 billion, and the balance sheet remains strong ‐ gross cash of R5.4 billion, and unutilised facilities of R4.75 billion, R4.0 billion of which is available until 2021.

Due to the company’s continued cash conservation strategy, Implats has decided not to declare an interim dividend for the six months to 31 December 2016.

Safety

With regard to safety, Potgieter said that safety will always remain the company’s first priority and given the difficult 12 months experienced at Impala Rustenburg, significant efforts are continuing to improve the safety culture at this operation.

“But despite a keen focus on safe operational performance, safety remains a significant challenge for some of the Rustenburg mining operations. In particular, multiple fatalities at 14 Shaft and 1 Shaft during the past 12 months had a significant impact on the group’s safe production efforts.”

No fatal incidents were recorded across other group operations, but four employees suffered fatal injuries at Impala Rustenburg during the reporting period.

 Outlook

Aligned with the forecasts for strong global demand for PGMs, supported by growing vehicle sales, tightening emission standards and growing unsustainable use of palladium in automotive catalytic systems, Implats expects fundamental market deficits to persist. This, coupled with reduced above‐ground stock liquidity, bodes well for much healthier supply/demand fundamentals in future, said the company.

The Implats board recently approved the construction of the Mupani replacement mine at Zimplats, as well as modernisation and detailed re‐scheduling studies to restart the 17 Shaft replacement project at Impala Rustenburg in two years’ time.

However, the company said that despite a positive market outlook, the operating environment in Southern Africa remains fluid and challenging, particularly at the more labour‐intensive South African mines where safety challenges and community disruptions continue to impede optimum performance.

Given the severe impact of safety stoppages at Impala Rustenburg and the community disruptions at Marula in the first half of the financial year, Implats has revised the full‐year production estimates for these operations to 650 000 refined platinum ounces and 80 000 platinum ounces in concentrate, respectively. The guidance for Zimplats, Two Rivers and Mimosa remains unchanged at 260 000 ounces platinum in matte, and 175 000 and 115 000 oz of platinum in concentrate, respectively.