JOHANNESBURG (miningweekly.com) – Platinum group metals (PGMs) company Implats on Thursday reported record financial results for the 12 months to June 30, driven by higher volumes sold into a strong PGMs pricing environment.

A final dividend of R12 a share was declared, bringing the total dividend for the full year ended June 30 to R22.00 a share, which amounts to R17.9-billion. Governments received R19.1-billion in taxes and royalties.

The increased profitability and strong free cash flow generation enabled further proactive debt reduction while providing strong shareholder returns in line with the group's capital allocation framework.

Improved operational momentum and higher sales generated a 125% increase in headline earnings to R36.4-billion, or R46.35 a share.

“This performance is testament to the progress made in the strategic repositioning of Implats over the past several years, which has enabled us to leverage the windfall on pricing to strengthen the business, care for employees, reward investors and secure the future growth and sustainability of the business,” Implats CEO Nico Muller stated in a release to Mining Weekly.

Production is from six mining operations on the Bushveld Complex in South Africa, the Great Dyke in Zimbabwe – the two most significant PGM-bearing orebodies in the world – and the Canadian Shield.

Implats’ PGMs, used to make many industrial, medical, and electronic items, contribute to a cleaner, greener world.

Revenue of R129.6-billion increased by 86%, gross profit increased by 130% to R53.5-billion and earnings before interest, taxes, depreciation and amortisation (Ebitda) of R61.4-billion was reported at an Ebitda margin of 47%.

A R1.5-billion IFRS 2 black economic empowerment charge was included in other expenses, arising on the refinancing of the empowerment partners in Marula and the establishment of an employee share ownership trust, a charge that has no tax impact and is included in both Ebitda and headline earnings.

Sustained improvements in both operational performance and prevailing and expected PGMs pricing, resulted in the group partially reversing prior impairments of R14.7-billion, resulting in the inclusion of an after-tax benefit of R10.6-billion in profit for the year of R47.9-billion.

Free cash generation totalled R38.3-billion, after capital investment of R6.3-billion at managed operations, resulting in net cash after debt of R23.5 billion and liquidity headroom of R30.9 billion in the period. The board of directors declared a final dividend of 1 200c a share, bringing the total dividend for the year to 2 200c a share.

A moderation in investment demand is likely to result in the platinum market returning to surplus in this calendar year.

The supply impact of the release of in-process inventory by South African producers will be compounded by the demand impact of the global semi-conductor chip shortage on automotive production, Implats stated.

In the case of palladium, reduced Russian supply should result in a persistent but moderated deficit, while in rhodium a more balanced market in 2021 is expected before demand growth in 2022 results in continued market tightness and a fundamental deficit, the release stated.

Implats expressed regret at three fatal injuries occurring at managed operations, against a 48% improvement in the fatal injury frequency rate to 0.026 and a 13% improvement in total injury frequency rate to 9.84.

Six element (6E) concentrate volumes rose 16% to 3.29-million ounces, 6E sales volumes rose 17% to 3.27-million ounces and unit costs per 6E ounce rose 11% to R14 840/oz.

Boosted by record rhodium and palladium prices, 6E dollar basket pricing was up 59% to $2 587/oz and revenue per 6E ounce sold increased by 59% to R39 478/oz.

Growing hydrogen economy momentum is elevating platinum’s future prospects, with Implats citing as a key feature the increased global focus on the critical role that South Africa plays in PGMs supply.