JOHANNESBURG (miningweekly.com) – Midtier platinum group metals (PGMs) producer Royal Bafokeng Holdings (RBPlat) on Tuesday reported sky-rocketed earnings on lower Covid-19-impacted half-year production.
The JSE-listed company’s earnings before interest, taxes, depreciation and amortisation (Ebitda) in the six months to June 30 soared 297.2% to more than R2-billion, and headline earnings rocketed 624.7% to R862.6-million, compared with a R164.4-million loss in the first half of last year. Basic headline earnings a share were up 573.6% to 335.3c a share. The company reported a net cash position of R701.8-million.
Covid-impacted four-element (4E) production was down by 12.9% to 173 500 oz and cash operating costs rose by 10.1% to R2.8-billion.
The consolidated gross profit of RBPlat, headed by CEO Steve Phiri, rose 2 396.3% to R1.2-billion from R48.9-million in the comparative period.
Supported by a strong pricing environment, the Bafokeng Rasimone Platinum Mine (BRPM) reported a 201% growth in gross profit to R1 072.6-million, while Styldrift reported a 171.3% growth in gross profit to R189.4-million.
The growth in the RBPlat business, improved market conditions, as well as the gold streaming transaction with Triple Flag contributed to a 2 307.3%-increase in net cash inflow from operating activities to R3.8-billion.
Covid interruptions resulted in an effective loss of 45 days of production on operations, yielding lower year-on-year performance in all key operational metrics.
Losses are estimated at 480 000 t in milled production, equating to 53 900 oz 4E, with BRPM losses estimated at 234 000 t (27 500 oz 4E) and Styldrift 246 000 t (26 400 oz 4E), given pre-lockdown operational performance.
Total development decreased by 20.6%, or 3.9 km, to 15 km, with BRPM development decreasing by 3 400 m to 12 200 km, and Styldrift development decreasing by 0.5 km to 2 800 km.
Notwithstanding the impact of the pandemic on the overall operational performance, total tonnes hoisted decreased by only 1.5% to 1 788 000 t, compared with the first half of 2019.
Styldrift tonnes hoisted increased by 17.9%, or 129 000 t, to 850 000 t as it continues with its ramp-up, achieving a hoisting milestone of 210 000 t in June. The increase in tonnes hoisted at Styldrift assisted in offsetting the 14.3%, or 157 000 t, decline in BRPM tonnes hoisted of 938 000 t. Total tonnes milled decreased by 13.2% to 1 623 000 t, compared with the first six months of 2019.
Lower milled volumes combined with the marginal increase in built-up head grade and lower concentrator recoveries, yielded a 12.9% decline in 4E and a 12.8% decline in platinum ounce production, with 173 500 oz 4E and 112 700 oz platinum metals being produced.
Steady progress was made at Styldrift during the reporting period, notwithstanding the impact of the national lockdown on project development and construction activities.
Where possible, construction and development activities not directly related to the establishment of the four spare IMS sections (4S and 5N), were redirected to support and prioritise the establishment of these sections necessary to secure the required flexibility to sustain 230 000 t/m.
However, achieving the 230 000 t/m third-quarter milestone is under pressure, given the Covid impact on the project construction schedule to date and the risk of additional related disruptions during the second half of the year.
All key safety metrics improved year-on-year, with no operational-related fatalities recorded during the reporting period. The total injury rate improved by 36.9%, the lost time injury rate by 16.7% and the serious injury frequency rate by 37.4%.
Owing to limited visibility on Covid’s operational affect for the remainder of the year, group production guidance for 2020 has been revised to between 3.55-million tonnes and 3.80-million tonnes at a 4E built-up head grade of 3.98 g/t to 4.03 g/t, yielding 380 000 oz to 405 000 oz 4E metals in concentrate.
Group capital expenditure for 2020, including escalation contingencies, is forecast to be R1.8-billion.
The second-half of the year is likely to see the PGMs market being less severely Covid-impacted than the first half, but the recovery could be slow and uneven.
“I must applaud our management and employees who have shown resilience and commitment to the business during this period, which is also reflected in our improved safety and operational performance,” stated Phiri in a media release to Mining Weekly.
“As a company, we have taken the view of sharing collective responsibility with government and other partners, to support the social and economic wellbeing of our communities, and we will continue to deliver on this during this pandemic.
“The impact of the shutdown due to the national lockdown on production and cost of mining and processing has been severe, with the necessary care and maintenance as well as shutdown and restart costs being incurred in the process.
“Despite the current uncertainties, we remain confident that our balance sheet remains robust to deliver shareholder value through our growth strategy and ultimately capital returns,” Phiri concluded.