JOHANNESBURG (miningweekly.com) – South Africa’s Anglo Platinum (Angloplat), the world’s largest producer of the precious metal, expects to report significantly lower full-year earnings when it releases its 2009 results early next month.

The company warned shareholders on Friday that basic earnings a share for the year ended December 31, were likely to be between 75% and 85% lower, compared with the figures reported in 2008.

Headline earnings a share could fall by between 89% and 99%, when compared with 2008.

In July, the miner posted interim headline earnings of R405-million, which was down 95% on that of the first half of 2008.

Angloplat, led by CEO Neville Nicolau, said in a statement on Friday that it would post lower earnings despite higher platinum sales volumes.

The company attributed the expected decrease to lower metal prices.

Angloplat’s share price fell by more than 3% on the news to R785,50 a share.

Fund manager Vestact director Sasha Naryshkine described the market’s response to the trading update as “okay”.

“Tell us something we don’t already know. The biggest issue for the majors this year is meeting production targets. That will be the biggest challenge,” he said in an interview.

Angloplat is targeting 2,4-million ounces of refined platinum production for the full year.

The metal price received declined by 35% in the period under review, Royal Bank of Canada Europe analyst Leon Esterhuizen said and pointed out that costs seem to remain an issue for Angloplat.

“Bear in mind that they have actually sold a lot more metal and earnings is still virtually non-existent. This also carries implications for cash flow, as it may be that the company is fast depleting the available loan facility from Anglo American, and that may well mean that we are getting ready for a capital raising,” he told Mining Weekly Online.


Meanwhile, Naryshkine expected other platinum producers to follow a similar trend to Anglo Platinum, recording downgraded basic earnings and headline earnings for the period ended December.

However, he expects the next reporting period to show a marked increase in earnings, as PGM prices had improved as demand for PGMs, especially in the auto catalyst market, had increased.

Both Naryshkine and Esterhuizen expect South Africa’s electricity tariff increases, which would come into effect in April, to drive up the price of PGMs.

However higher power prices would have a negative connotation if the price of mining PGMs in South Africa – the world’s number-one platinum producer – becomes too high, Naryshkine noted.

Power utility Eskom has applied for a tariff increase of 35% a year for a three-year period starting on April 1.

Angloplat would publish its 2009 annual results on Friday 8.

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