Impala Platinum’s gross refined platinum production for its quarter to March ‘15 almost doubled (by 47%) to 301 000 oz of platinum, compared to 205 000 oz platinum in the prior comparable period.

The increase is largely as a result of the strike impact at Impala Rustenburg during last year’s March quarter.

Notwithstanding this increase, gross refined platinum production for the nine-month period ended 31 March 2015 decreased by 6% from 992 000 oz platinum achieved in the previous comparable period, to 932 000 oz platinum in the current financial year.

This decrease is directly as a result of the wage strike impact, power interruption challenges in South Africa, lower volumes from Zimplats as a result of the temporary closure of the Bimha mine, safety and industrial action stoppages during the first half of the financial year at Marula and lower throughput at Impala Refining Services (IRS) due to the treatment of once-off material in the prior comparable period.

This was all mitigated to some extent by the improved performance at Impala Rustenburg this quarter and further operational improvements at Mimosa.

Power a major problem

While the fundamentals for PGMs remain robust, and Impala Platinum (Implats) is strongly focused on improving operating efficiencies while delivering on its capital projects for a sustained and profitable future, the current Eskom crisis remains a serious issue.

As a ‘Key Customer’, or an ‘Energy Intensive User’, Implats is in continual discussion with Eskom to manage these disruptions as best possible. The Group has a comprehensive electrical power control system in place, and the electrical power usage profile has been adjusted to offset the national power grid requirements.

However, the Group’s ability to further reduce power consumption is limited and, while further energy efficiency opportunities continue to be investigated, more frequent and/or severe power constraints will severely impact production into the future.

 

Impala –  hindered by power constraints

Tonnes milled at Impala Rustenburg improved from the strike-impacted quarter ended 31 March 2014 (273 000 t) to 2.51 Mt during the quarter ended 31 March 2015, which is similar to the performance reported for the non-strike impacted quarter ended 31 March 2013 at this operation (2.36 Mt).

Consequently, refined platinum production for the quarter improved to 143 000 oz platinum for the period under review. The operation continued to experience power interruptions during the quarter under review, but was able to mitigate these impacts through power curtailment and power shifting to off-peak periods at the smelting facility.

Production guidance for the full financial year is maintained at 575 000 platinum ounces. However, excessive safety stoppages following the recent two tragic fatalities at Impala Rustenburg and escalating power constraints may impact planned production performance in the final quarter of the current financial year.

Marula – hindered by power constraints as well

Tonnes milled at Marula decreased by 6.5% to 373 000 t for the quarter ended March 2015 compared to 399 000 t reported in the prior corresponding period.

Platinum in concentrate production for the quarter decreased in line with the lower mill throughput to 16 000 oz platinum. This operation has also been largely hindered by power constraint difficulties.

Zimplats – re-developing Bimha mine

Tonnes milled at Zimplats during the quarter ended 31 March 2015 decreased by 11% to 1.26 Mt compared to 1.42 Mt reported in the prior corresponding period. Platinum production in matte for the quarter consequently decreased in line with lower mill throughput to 52 000 oz platinum for the period under review.

Zimplats
Zimplats

Mill throughput over the nine-month period ended 31 March 2015 decreased by 15% to3.74 Mt, compared to 4.40 Mt in the corresponding prior period.

The lower throughput was directly attributable to the safety closure of the Bimha mine in August 2014, mitigated to a large degree by the successful re-deployment of affected mining crews to other mining areas as well as the continued ramp-up of the Phase 2 expansion project.

The re-development of Bimha mine and the initiation of open-pit mining to mitigate the production impact is progressing well, with the first open-pit material expected to be processed in April 2015.

The ramp-up of the Phase 2 expansion project remains on schedule for completion in FY2015 with the Mupfuti mine expected to deliver steady-state capacity of 90 000 oz of platinum in the next financial year.

All of the above interventions are expected to limit the production impact of closing Bimha Mine to less than 40 000 platinum ounces for FY2015 and for full processing capacity (6 Mtpa) to be restored in FY2016.

Zimplats continues to engage with the Government of Zimbabwe with regards to the indigenisation implementation plan and the securing of a more conducive regulatory and fiscal framework for the mining industry in Zimbabwe.

Mimosa – working on unbeneficiated platinum export levy

Tonnes milled at Mimosa increased by 9% to 622 000 t for the quarter ended 31 March 2015 compared to 569 000 t reported in the corresponding prior period. Platinum in concentrate production for the quarter increased as a result of the increased mill throughput to 28 000 oz.

On 30 January 2015, Implats informed shareholders that a 15% export levy on unbeneficiated platinum concentrates in Zimbabwe became effective from 1 January 2015 and advised shareholders that implementation of this levy would have a material impact on the profitability and sustainability of Mimosa.

The Group in consultation with the Chamber of Mines in Zimbabwe, initiated active engagement with the Government of Zimbabwe to highlight this risk and in an endeavour to secure a more conducive investment environment where current operations can be sustained and ultimately the industry grown in Zimbabwe. These engagements are on-going, and further announcements will be made as soon possible.

Safety record impacted

There were no fatal incidents during the quarter ended 31 March 2015 and the Group has achieved six consecutive months without any fatal accidents.

Regrettably, subsequent to the quarter ended 31 March 2015 there were two tragic fatalities at Impala Rustenburg. Both incidents were related to trucks and tramming, one in a conventional track bound section at E&F Shaft and one in a trackless mining area at 12 Shaft.

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