JOHANNESBURG (miningweekly.com) – Unplanned interruptions are likely to be a regular feature of the remaining months of the 2020 financial year, Implats CEO Nico Muller said on Thursday, when his platinum group metals mining and refining company presented production results for the three months to March 31.

The impact of the coronavirus would be a feature for some time and operating in a ‘business as usual’ environment would not be possible until effective prevention and treatment measures became readily available, Muller said in a release to Mining Weekly.

In the third quarter of the company's financial year, group tonnes milled, excluding joint venture operations, improved by 18% to 5.36-million tonnes, compared with 4.53-million tonnes in the prior comparable period.

An improved mining performance at Marula and Zimplats in Zimbabwe compensated for lower volumes from Impala Rustenburg, with absolute volume gains driven by the inclusion of Impala Canada and its contribution of 865 000 t.

Reported mill grade declined by 4% to 3.64 g/t six element (6E), benefitting from a strong performance at Marula but impacted by the inclusion of lower-grade volumes from Impala Canada.

Mine-to-market 6E concentrate production was stable on a like-for-like basis with stronger volumes from Marula and Zimplats offsetting weaker production from Impala Rustenburg and Two Rivers. Together with production from the recently acquired Impala Canada operation, concentrate volumes increased by 8% to 667 000 oz from the prior comparable period.

Receipts of 6E in concentrate by Impala Refining Services from third-party and toll customers increased by 3% to 85 000 oz. Gross concentrate production and receipts improved by 7% to 751 000 oz.

Refined and saleable 6E production, which included saleable ounces from Impala Canada, increased by a more material 23% to 862 000 oz.

Net cash, excluding finance leases, amounted to R3.2-billion at March 31, an improvement of R2.1-billion from closing levels at June 30 last year of R1.1-billion, after the payment of R978-million in dividends to Implats shareholders during March.

The company stated that its balance sheet remained strong, with an unutilised revolving credit facility of R4-billion available until June 2021. The Group had liquidity headroom of R12.9-billion at March 31.

In addition, the group had embarked on various cash preservation measures to improve liquidity. These included a reduction of nonessential operational and capital expenditure and the extension of the maturity of the Standard Bank term loan associated with the Marula black economic empowerment ownership of R865-million from June 30 to September 30.

FORCE MAJEURE

With the bulk of its annual contract metals sales delivered on a monthly basis to customers around the world, the company declared force majeure on its contractual metal deliveries when the Covid-19 lockdown was announced on March 23.

This allowed Implats and its customers to suspend the operation of the contract for the duration of the force majeure event, as reviewed and updated on a regular basis. Depending on how the situation developed, partial, and later possibly complete, upliftment of the force majeure protection could be considered.

Discussions for resumed customer deliveries had been ongoing on this basis as greater clarification regarding operating conditions had been reached. The majority of customers had elected to receive metal on a delayed delivery schedule and, where logistics allowed, delivery of metal to customers occurred in April.

The upliftment of the force majeure on IRS receipts is a near-term priority.

OUTLOOK AND GUIDANCE

While Implats described itself as being well on-track to meeting production, unit costs and capital expenditure (capex) guidance that it provided with the release of its half-year results to December 31, it was now faced with a period of unprecedented Covid uncertainty owing to legislated limitations on production capacity at South African operations, which had resulted in guidance being lowered by 30% to 40%.

While milled volumes from Zimbabwean operations were largely unaffected by the Zimbabwean national lockdown, underground production from Impala Rustenburg, Marula and the Two Rivers joint venture (JV) were heavily impacted during the initial period of South Africa’s lockdown. Minimal underground production was secured during April as the focus remained on the safety and health of employees and ensuring the orderly screening, testing and training of returning employees ahead of the gradual resumption of drilling and blasting.

At Impala Canada, following a positive case of Covid-19, further employees have tested positive and the mine was placed on care and maintenance and the workforce quarantined for a two-week period from 13 April 2020. Regrettably, an employee with comorbidities passed away on April 23. Discussions for a planned resumption of operating activities were ongoing with the relevant health authorities in Ontario.

In South Africa, the group took a phased approach to lockdown-impacted processing activities, in line with regulations which recognised smelters and refineries as ‘essential services’ during the lockdown period.

This has allowed a systematic ramp-up of operations and production of refined volumes during the lockdown has allowed for a reduction of excess in-process inventory, with refined volumes likely to exceed concentrate production.

In Zimbabwe, mines remained vulnerable to potential unforeseen interruptions during the remainder of the forecast period. In Canada, the guidance assumed operations will resume in May 2 but at a lower production rate.

Capex has been impacted by the wider effects of the South African lockdown, together with rand weakness on spend in Zimbabwe and Canada. Revised capex guidance reflected rand weakness, offset by savings and deferment where necessary.

SAFETY BEING PRIORITISED

Regrettably, Mimosa, a non-managed JV operation, recorded a fatal injury on March 24 when Stephen Chizola was fatally injured in a fall-of-ground accident.

Increased leadership focus and greater collaboration with all stakeholders is prioritising safe production across all operations and no fatalities were reported at managed operations during the quarter under review.

The lost-time-injury-frequency rate of 4.87 and all injury frequency rate of 11.86 per million person hours worked both improved by 6%.

The JSE-listed company stated that internal planning to secure operational resilience during the coronavirus pandemic had been ongoing since its emergence in early 2020.

In the months ahead, the group would be maintaining close and collaborative relationships with its customers and further reducing the group’s excess processing stockpile to secure cashflow and protect its financial position.

Employees were undergoing Covid-19 screening, which involved using questionnaires, skin temperature thermo-scanning and, if necessary, core temperature screening, before entering their work areas.

Employees with risk indicators were isolated at dedicated areas at the operations and then transported to designated medical facilities for diagnosis and, if necessary, testing, quarantine and/or hospitalisation.

A key part of Implats’ strategy has been to identify potentially vulnerable employees and to institute additional precautionary measures to increase protection. This includes the provision of vitamin and dietary supplements, flu vaccinations and critical medical screening. In addition, employees have been provided with pre-packaged supplies of chronic medication for a period of six months to ensure high-risk employees do not need to visit hospitals or clinics during this time. Suitable temporary company accommodation is also being availed to employees who may not be able to self-isolate or maintain recommended physical distancing measures when not at work.