JOHANNESBURG (miningweekly.com) –  The performance of Royal Bafokeng Platinum (RBPlat) in the six months to June 30 was a mixture of the good, the bad and maybe even the ugly, RBPlat CEO Steve Phiri said on Tuesday.

Phiri was speaking to Mining Weekly Online on the sidelines of the company’s presentation of interim results of a loss a share of 70.8c a share on high cash costs and high levels of depreciation related to the ramp-up of the Styldrift project, interest charged on the deferred payment and high borrowing costs expensed in 2019. (Also watch attached Creamer Media video.)

On the good side, the gross half-year profit of Bafokeng Rasimone Platinum Mine (BRPM) rose by a towering 140% to R356.3-million on a solid operational performance and cost containment, and the bringing on board of the upper group two (UG2) platform. RBPlat has unlocked South Shaft to access UG2, which has released higher-priced palladium and rhodium.

But a not-so-good performance from Styldrift resulted in a gross loss of R265.5-million, even though it produced 21% more than in the corresponding period of last year, but lower than planned.

“At Styldrift, we’re in a ramping-up process, and in ramping-up programmes there are ups and downs, all the time. But it has to be said that we’re not satisfied with the performance because the ramping-up was quite slow,” Phiri said.

Slow construction of the strike belts prevented hoisting and serious problems were experienced as a result of a shortage of trackless management engineering skills.

“We had serious problems with skills shortage, people coming, going and being recruited because it’s a very scarce skill. When running a mechanised mine, you need fleet and you need it maintained,” he said.

Compounding that were problems with ground conditions, which had to be rehabilitated. However, blasting proceeded quite well, but the inability to hoist has resulted in tonnes of ore still needing to be brought to surface.

“The bottom line is that the ramping-up was not as good as it’s supposed to be and, as a result, the costs at Styldrift were quite high, therefore diluting the good performance of BRPM.

“But, having said that, we’re excited with Styldrift. It’s a wonderful mine,” he said.

Production guidance for the full year has been revised down to the range of 3.9-million tonnes to four-million tonnes at a built-up head grade of 4 g/t to 4.10 g/t, yielding metal production of between 430 000 oz and 440 000 oz.

RBPlat has embarked on an aggressive recruitment and training campaign to overcome its skills shortages at mechanised mining level.

RBPlat executive head: operations Neil Carr said that below-planned performance was underpinned by operational and planning challenges stemming from the termination of the mining contractor, the implementation of full calendar operations, or Fulco, and the difficulty experienced in the recruitment of competent trackless engineers and engineering skills and mining skills.

RBPlat CFO Hanré Rossouw said RBPlat’s financial results reflected the journey towards 'getting there', as well as frustrations experienced along the progress route.

“We’ve seen a significant increase in revenue with the inclusion of Styldrift in our revenue base, as well as buoyant market conditions,” Rossouw said.

Combined with the weaker rand, RBPlat’s basket price increased by 23.5% to R24 694 per platinum ounce in the six months to June 30.

This, together with the 21% increase in platinum group metal (PGM) production, supported a 90.6% increase in revenue to R3.163-billion for the period.

The improved basket price was assisted by a weaker average exchange rate achieved for the period. Other key features were the doubling of earnings before interest, taxes, depreciation and amortisation to R525.6-million and a fall in fixed costs.

Tragically, employee Joao Antonio Machava died in an accident at the South Shaft operation, which came against the background of overall improvement in total injury, lost time and serious injury frequency rates.

PLATINUM GROUP METAL PRICES

While the platinum price remains subdued owing mainly to the anti-diesel sentiment in Europe as well as the switch to particularly battery electric vehicles, the prices of palladium and rhodium have increased.

Rhodium outperformed palladium by rising to $2 840/oz from $2 188/oz a year ago.

“We’re currently seeing rhodium prices of around $3 350/oz and we hope they will remain largely at those levels for the rest of the year,” said Phiri.

RBPlat expects platinum to continue to be in surplus and palladium to be in deficit for the rest of the year.

Total cash operating costs increased by R1 289-million to R2 631-million. Total capital expenditure (capex) was 55.0% lower than last year at R621-million, reflecting predominantly Styldrift’s new commercial operating status and the near completion of Phase III at BRPM.

Other projects under way include the BRPM North Shaft Phase III Replacement Project involving extending the North Shaft Merensky decline access infrastructure and associated reef infrastructure from level 10 to the mine boundary at level 15. In line with the anticipated completion of the project in the ensuing half-year period, capex declined to R6-million for the half-year, with project expenditure to date totalling R1 126-million.

Capex in the half-year of R536-million at Styldrift took the total outlay so far to R12.34-billion.

Group capex is forecast to remain unchanged at R1.7- billion.