JSE-listed platinum group metals (PGMs) producer Impala Platinum (Implats) reports that a significant increase in the dollar basket price for PGMs, together with higher sales volumes of platinum, palladium, ruthenium, rhodium, iridium and gold (6E), resulted in higher revenue and improved profitability for financial year ended June 30.
Consequently, Implats is expecting headline earnings and headline earnings a share for the period to increase by at least 20%, from the R16-billion and R20.75 reported for the year ended June 30, 2020, to at least R19.2-billion and R24.90, respectively.
Headline earnings for the period were impacted by the one-off non-cash International Finance Reporting Standard 2 black economic empowerment (BEE) charge of R1.5-billion, which resulted in no tax impact arising on the Marula BEE loan refinancing.
Basic earnings and basic earnings a share for the period are also expected to increase by at least 20%, from the R16-billion and R20.66 reported for the 2020 financial year, to at least R19.2-billion and R24.80, respectively.
Basic earnings for the period were favourably impacted by the reversal of post-tax impairment losses of R10.6-billion.
The miner notes that group capital expenditure (capex) is expected to increase to about R6.5-billion, from R4.5-billion in the comparative period, noting that capex in the comparative period of 2020 had been impacted on by Covid-19 restrictions.
The increased spend for the period was a result of the higher operating rates achieved, the inclusion of Impala Canada for a full reporting period and the acceleration of spend at Zimplats, in Zimbabwe, following approval of the Mupani and Bimha expansion projects.
Also, group unit costs per 6E ounce are expected to increase to about R14 800 on a stock-adjusted basis.
In addition, Implats notes that inflationary pressures during the period were compounded by targeted spend on development to improve mining flexibility and asset integrity at Impala Rustenburg, as well as Covid-19-related costs.
Implats recorded a 15.6% increase in gross concentrate volumes, with 3.29-million ounces of 6E PGMs produced during the financial year.
This includes a 17.9% increase in concentrate production to 2.37-million ounces of 6E from managed operations and a 10.3% increase in concentrate production to 561 000 oz of 6E from joint venture operations.
Revenue per 6E ounce sold is expected to increase by 58.8%, to R39 478/oz, reflecting record palladium and rhodium pricing in the financial year, and the benefit of increased sales volumes of minor PGMs on the pricing mix.
However, the miner notes that the expected destocking of in-process inventory was adversely impacted by an increase in the number of days impacted by load-shedding by power utility Eskom and the timing of scheduled maintenance at Implats’ processing facilities in the second half of the period owing to Covid-19-related delays.
Nonetheless, the benefit of higher contributions of saleable production from Implats’ Canada-based operations resulted in a 16.3% increase in gross refined volumes to 3.27-million ounces of 6E.
Implats reports that its sales volumes of 3.27-million 6E ounces benefitted from some destocking of ruthenium as demand and pricing strengthened during the period under review.