IMPALA Platinum (Implats) outlined expansion projects for its Zimbabwe and South African operations, but this was not enough to cheer up JSE investors in the mining company who appeared unnerved by its 9 percent fall in interim headline earnings (Heps) per share.
Shares in the world's second largest producer of the precious metal were 6 percent weaker at R27.5 in afternoon trade.
This was after Implats reported a 4 percent decline in headline earnings at R13.8 billion on the back of a 9 percent fall in Heps to 1.690 cents per share for the six months ended December 31, 2021.
“The market hasn't responded well this afternoon with the share price down 6 percent so far on what is a green day for its PGM (platinum group metals) peers,” Preston Narainsamy, a portfolio manager at Nedbank Private Wealth, told Business Report.
Shares in Implats' PGM peers, Sibanye, Northam and Anglo Platinum were up 1.64 percent, 0.4 percent and 2.23 percent, respectively, in afternoon trade.
The drop in Implats' interim earnings per share “was primarily driven by a weaker performance operationally as well as inflationary cost pressures which resulted in higher unit costs of production,” explained Narainsamy.
The company, however, had free cash flow of R15.1 billion and closing net cash (excluding leases) of R18.5bn.
This yielded an interim dividend of 525c per share after acquiring a 35.3 percent stake in Royal Bafokeng Platinum (RBPlat), with the “shares in issue increasing by around 30 million new shares as part of the RBPlat acquisition, which also resulted in a lighter reported eps (earnings per share) number,” according to analysts.
Lower reported volumes from Rustenburg and Impala Canada offset improved throughput at Marula, with concentrate production at managed operations decreasing four percent to 1.62 million ounces.
Production from the joint venture operations at Two Rivers and Mimosa declined by 4 percent to 271 000 ounces while third-party receipts of 188 000 ounces were 4 percent lower.
Group refined production of 1.62 million 6E ounces, including saleable production from Impala Canada, declined by 5 percent, the company said.
Its total cash operating costs increased by 12 percent, while unit cost inflation was compounded by lower production volumes and, on a stock-adjusted basis, increased by 17 percent to R16 756 per ounce compared to R14 292 in the previous contrasting period.
Subsequently, capital expenditure at managed operations rose by 34 percent to R3.6bn “as investment accelerated across the mining and processing operations at Impala Rustenburg following Covid-19-related delays in the prior comparable period, and several group replacement and growth projects” gathered pace during the review period.
Expansion projects for Implats include key refinery facilities in Zimbabwe under the Zimplats unit which is also building own sustainable power solutions.
The local beneficiation projects by Zimplats were expected to improve production by 80 000 ounces per annum with a potential to further elevate that to a total of 180 000 ounces, chief executive, Nick Muller, said during a conference call yesterday.
He added that the Zimplats local beneficiation facility provided the company with the opportunity to smelt Zimplats as well as Mimosa concentrate in Zimbabwe while also qualifying the company “for dispensation against the export levy on unbeneficiated platinum concentrate”.
In spite of the headwinds Implats has faced, the company appears poised to benefit from strong PGM prices and elevated production from its expansion and replacement production projects.
“Elevated PGM prices should counter some of these pressures heading into 2H FY22,” added Narainsamy.
Implats shares closed 0.81 percent lower at R291.55 on the JSE yesterday.
BUSINESS REPORT ONLINE