Platinum group metals (PGMs) miner Impala Platinum (Implats) expects its basic earnings for the financial year ended June 30 to decrease by between 29% and 35% year-on-year, to between R30.5-billion and R33.5-billion, while its earnings a share for the period are expected to decrease by between 33% and 39% to between R36.69 and R40.30.
In the previous financial year, Implats’ basic earnings of R47-billion and earnings a share of R59.96 benefited from the reversal of impairment losses on property, plant and equipment and the prepayment of royalties of R10.6-billion or R13.52 a share (post-tax).
Earnings during the financial year under review were adversely impacted by the combination of lower sales revenue and inflationary pressures on operating costs.
The impairment reversals in the period were excluded from headline earnings and headline earnings per share (HEPS), and as a result, headline earnings are expected to decrease by between 8% and 16% year-on-year, to between R30.5-billion and R33.5-billion.
HEPS are also expected to decrease by between 13% and 21% year-on-year, to between R36.69 and R40.30.
The weighted average number of shares in issue for the period increased from 784.43-million in the 2021 financial year, to 831.25-million in the 2022 financial year.
The number of Implats shares in issue also increased in the period, from 817.26-million as at June 30, 2021, to 850.22-million at June 30 this year, following the issue of 32.95-million Implats shares as part of the consideration for the 37.83% stake acquired in Royal Bafokeng Platinum.
Implats plans to publish its audited results for the 2022 financial year on or about September 1.
During the period, Implats navigated several operational challenges, including extended safety stoppages, intermittent industrial action and power-supply interruptions at its Rustenburg mine, producing a notable impact on production.
Ongoing supply chain constraints also hampered operational continuity at Implats’ Canada-based operations.
The Limpopo-based, 73%-owned Marula mine delivered a record performance in the period, while 87%-owned Zimbabwe-based Zimplats sustained production levels despite a complex operating environment and increased project activity.
During the 12-month period, Implats group recorded a 3.6% decrease in gross concentrate volumes to 3.17-million ounces of platinum, palladium, rhodium, ruthenium, iridium and gold (6E) PGMs, compared with 3.29-million ounces of 6E in the 2021 financial year.
This includes a 4.3% decrease in concentrate production to 2.27-million ounces of 6E from managed operations and a 2.1% decrease in concentrate production to 550 000 oz of 6E from joint ventures.
Concentrate receipts from third parties declined by 1.8% to 351 000 oz of 6E.
Gross refined volumes, including saleable production from Impala Canada, were impacted by lower concentrate production and the extended maintenance required on the Number 3 Furnace at Impala Rustenburg.
Consequently, gross refined volumes declined by 5.6% to 3.09-million ounces of 6E. Implats notes that refined volumes in the 2021 financial year benefitted from increased availability of processing capacity as a result of the timing of yearly processing maintenance.
Sales volumes of 3.15-million ounces of 6E benefitted from some destocking of refined inventory to take advantage of firmer PGMs pricing in the second half of the 2022 financial year, and to offset the impact of the extended furnace maintenance.
However, Implats expects its revenue per 6E ounce sold to decline by 4.5% to R37 703/oz, reflecting the impact of weaker dollar pricing for its primary products.
Group capital expenditure is expected to increase to about R9.1-billion, from R6.4-billion in the previous financial year, owing to accelerated project spend at Zimplats and group processing assets, together with an overall increase in capital spend across the operations.
Implats’ group unit costs per 6E ounce are expected to increase to about R17 364 on a stock-adjusted basis.
The miner notes that inflationary pressures were compounded by lower production volumes and the payment of the previously signalled discretionary employee bonus in recognition of the group’s strong financial performance in the 2021 financial year.