Platinum major Royal Bafokeng Platinum (RBPlat) headline earnings grew by 204% to R166.7 million for the 2016 year. Its headline earnings per share was 87 cents.This was compared to a headline loss of 83 cents per share in the previous comparable period.
Sales revenue (excluding Styldrift) increased by 9.8% to R3.3 billin year-on-year, reflecting the higher rand basket price and serving as the main driver of the increase in the gross profit margin to 7.2% compared to a financial year 2015 loss of 1.3%.
Ebitda as a percentage of revenue increased from 9.8% in 2015 to 14.7% in 2016, which represents a 50% improvement.
BRPM’s average cash unit per tonne milled increased by 10.4% from R1 066 in 2015 to R1 177 in 2016. The cash unit cost per platinum ounce increased by 7.8% from R 14 504 to R 15 639, mainly due to above inflationary increases in labour, contractor and utility costs.
Net cash flow generated by operations reduced marginally from R619.2 million to R 585.3 million in 2016. At 31 December 2016 the group’s cash and near-cash investments amounted to R835, 5 million compared to R917, 6 million at 31 December 2015.
During 2016, RBPlat funded 74% of its R1,1 billion capital expenditure from cash generated by operations and Styldrift I on-reef development revenue receipts – a significant improvement on the 30% of capital expenditure that was funded from cash generated by operations in 2015.
Total capex was reduced by 44% year on year to R1,126 billion given the scaling down of activities at Styldrift in response to the flat markets, revealed RBPlat.
At BRPM, replacement capital expenditure was 78. 5% lower due to the completion of certain projects and the deferral of others. Stay-in-business capital expenditure was only marginally down by 1.8% to R110 million (40% of operating expenditure), which is expected to increase to between 4% and 6% of operating expenditure.
RBPlat said that although the period under review was marred by the loss of Thabang Clemente Frederick Mokone in a conveyor belt accident at BRPM, there was a 31.5% improvement in the total injury frequency rate (TIFR), with a 7.1% improvement year-on-year in the lost time injury frequency rate (LTIFR) and an overall 62% improvement in the LTIFR since 2010.
Social and labour plans
For the company’s doorstep communities, the main focus of the year was education support, which is designed to address maths and science learning, governance and school management skills.
“With our support since 2013, Charora High School, the only high school in the communities in which we operate, has grown its matric learners in maths and science by 155% and 110% respectively,” said Royal Bafokeng Platinum.
Review of operations
Tonnage losses attributable to DMR safety stoppages were less serious in 2016 (102 000 t) than in 2015 (275 000 t). However, the frequency of section 54 stoppages spiked in the third quarter of the year, adversely affecting that quarter’s output and the overall 2016 output.
Overall, combined Merensky and UG2 tonnes delivered increased by 12.3% to 2 759 000 t (FY 2015: 2 457 000 t). Merensky tonnes increased by 16.2% to 2 176 000 t mainly due to on-reef development contribution from Styldrift I (FY 2015: 1 872 000 t). UG2 tonnes delivered decreased 0.3% year-on-year. The higher Merensky delivered tonnes resulted in the UG2 contribution reducing to 21%.
The increased on-reef development at Styldrift had a predictable impact on the 4E built-up head grade, which declined to 4.03 g/t. On the other hand the 4E built-up head grade at BRPM improved by 1% to 4.18 g/t, said RBPlat.
Notwithstanding the steady progress and growth in production capacity at Styldrift I to 50 000 tpm, development progress of 5 km was below the 6.8 km target, owing to changes in support methodology and localised geotechnical conditions.
Progress made at Styldrift I, together with the improvements in the rand basket price allowed RBPlat to commit to the next phase of expansion at Styldrift, which will ramp-up the mine to 150 000 tpm at a capital cost of R4.75 billion, in addition to the R6.09 billion that had been spent since the start of the project up to the end of September 2016. This will secure an optimal level of Merensky production without the need to incur the significant expenditure to process production beyond this level.
Labour stability continues to be an important element of the company’s overall performance. In a ballot held by the National Union of Mineworkers in November 2016, over two-thirds of Royal Bafokeng Platinum’s workforce voted for having a closed-shop agreement at RBPlat.
Conclusion and outlook
“Our flexible and robust operations allow for tough cash preservation strategies, which helped us to advance our journey and protect stakeholder value.
"Our focus will remain on achieving operational excellence, zero fatalities, continuing to improve our safety performance and improving productivity levels and our cost profile,” concluded Royal Bafokeng Platinum CEO Steve Phiri.