South African platinum miner Impala Platinum on Friday reported a 39% increase in diluted headline earnings per share (HEPS) to 5 989 cents for the year ended June from 4 322 cents a year ago. Basic HEPS were also up 39% to 6 006 cents from 4 325 cents before.
A final dividend of R22 per share was declared, bringing the total dividend for the year to R87.
The I-Net Bridge consensus forecast was for HEPS of 5 806,2 cents and a dividend of R56,96.
The group reported record sales revenues of R17,5-billion — or $2,7-billion — up 40% on sales of R12,5-billion a year ago.
The group said gross platinum production was steady at 1,846-million ounces with platinum group metals (PGM) production at 3,49-million ounces. There was record production at all the mining operations.
Impala Platinum Mine reported record production of 1,125-million ounces of platinum (2,003 million ounces of PGMs), contributing 61% toward gross
production. However this was about 30 000 platinum ounces less than expected owing to a lower than anticipated grade, slower than envisaged improvements in mining efficiencies and three lost shifts due to Cosatu stayaways.
The group unit cost per platinum ounce refined was up by 8,7%. Commenting on the results, CEO Keith Rumble said the year was characterised by high levels of profitability assisted by higher metal prices and a strong market for platinum group metals.
He noted that the significant improvement in group margins from 34 to 42%, and from 42 to 53% at Impala, bear testament to the strength of its underlying business fundamentals and its determination that cost control remains a primary focus.
Results for the year were underpinned by the strength of the market for PGMs driven primarily by automotive demand. The price of platinum reached an all-time high of $1 335 per ounce in May 2006, while rhodium exceeded $6 000 per ounce in the same month, he noted.
Dollar revenues per platinum ounce sold rose by 35% while rand revenues were 38% higher owing to the 3% depreciation of the currency.
Operating profit was 73% higher at R7,3-billion. However, net profit decreased year-on-year to R4,4-billion from R5,3-billion due to the impact of the extraordinary profit from the Lonplats sale in the previous year.
Rumble added that steady progress was being made at Marula Platinum with the interim mining rapidly approaching steady state. Platinum production increased by 34% to 40 000 ounces and full production of 136 000 ounces of platinum in concentrate is expected by the end of financial year 2009.
The Two Rivers Platinum commenced mining this year and first concentrate was dispatched to IRS on August 15. Full production will be reached in financial year 2008 adding significant growth to Implats’ portfolio over the next five years.
Rumble added that Zimplats delivered an excellent performance increasing production by 4% to 90 300 ounces of platinum-in-matte while limiting cost
increases to just over 3% on the previous year supporting the move from more expensive opencast tonnages to underground production. Margins have improved by 109% over the period to 42%. The approval of phase one of the long-term expansion plan will require the investment of $258-million and will see production increase to 160 000 ounces of platinum per annum by financial year 2010.
Production at Mimosa continues to exceed expectations and was up 8% to a record 72 200 ounces in concentrate. The expansion project to 85 000 ounces of platinum was completed on time and under budget. Incremental expansions continue to be considered, he said.
Although production at IRS declined due largely to movements in pipeline stocks, financially its performance exceeded expectations increasing by 53% and contributing 18% to group headline profit.
Group unit costs per platinum ounce refined excluding share-based payments were up 8,7% over the period in part as a result of the 6,5% wage and benefits increase and static production volumes.
He said that black economic empowerment (BEE) has been a key focus during the year for the group. On conclusion of these transactions Impala would have exceeded the ten-year (2014) and Marula the five-year (2009) BEE equity ownership targets set by legislation whilst at the same time ensuring affordable, sustainable and broad-based compliance.
At the Impala Platinum level three separate transactions have been entered into, namely the creation of Incwala Resources, an agreement with the Royal Bafokeng Group and the creation of an employee share ownership programme (ESOP). When fully implemented and calculated as an interest in Impala Platinum these will account for a BEE equity ownership of around 26%.
At Marula Platinum agreements have been concluded with three equal partners for a combined stake of 22,5% in the operation.
Looking ahead, Rumble said prospects for PGMs remain sound, and Impala continues its consistent growth in production, targeting 2,3-million ounces of platinum by financial year 2010. Production in financial year 2007 is anticipated to exceed two million ounces of platinum.
“Costs and productivity remain the core focus for the group. Capital expenditure is set to continue to rise to R2,94-billion in financial year 2007, due mainly to the 16 and 20 shaft projects, the smelter upgrade at Impala Platinum, and the phase 1 expansion at Zimplats.
“In line with anticipated market conditions and an increase in production, headline earnings are expected to be higher in the 2007 financial year,” he concluded. – I-Net Bridge