Johannesburg, South Africa — MININGREVIEW.COM — 09 February 2010 – Anglo Platinum “’ the world’s largest platinum producer “’ says it will pay off most of its debt via a US$1.6 billion (R12 billion) rights issue backed by its owner, and forecasts that its markets will turn around in 2010, sending its shares higher.
The company “’ which supplies close to half the world’s platinum “’ announced the discounted cash call here together with sharply weaker full-year earnings in line with its guidance, and said demand for the metal “’ which closely tracks production cycles in the auto industry “’ would grow this year.
Majority owner Anglo American Plc backed the rights issue, which Angloplat had flagged last year, boosting sentiment in the South Africa-listed firm’s shares which rose 6.10% to R730 yesterday.
“People have been expecting the rights issue, and even though it is deeply discounted, it broadly means the company will be less of a risky investment now,” said Sanlam Investment Management platinum analyst Barend Ritter.
Anglo American, which owns about 80% of Angloplat, said it would subscribe in full to its entitlement and underwrite the minority portion of the offer, the proceeds of which would also settle Angloplat’s debt with Anglo.
Angloplat said it would not pay a dividend at this stage pending an improvement in the platinum market.
It added that lower dollar prices for the metal had led to a 95% drop in 2009 headline earnings per share to 298 cents, but added that the second half of last year had seen platinum prices rise by 60% to $1 475 an ounce. A major restructuring of Angloplat’s mining operations, coupled with the operational efficiencies such as cutbacks in staff, had helped it reduce the unit cost of production.
The group aims to produce 2.5 million oz in 2010 and 2011, and thereafter raise output by 3% pa. It also forecast the platinum market to return to a deficit in 2010 due to a small rise in supply and a significant recovery in demand.