Implats’ interim earnings steady, despite lower refined output

3rd February 2023 By: Marleny Arnoldi - Creamer Media Contributing Editor Online

JSE-listed Impala Platinum Holdings (Implats) expects its earnings before interest, taxes, depreciation and amortisation (Ebtida) for the six months ended December 31 to remain broadly unchanged from the Ebitda of R24.5-billion reported for the six-month period ended December 31, 2021.

The company, which will publish its interim results on or about March 2, says its production also remained relatively flat year-on-year at about 162-million ounces of platinum, palladium, rhodium, ruthenium, osmium and gold (6E).

Production from managed operations had increased by 2% to 1.18-million ounces, while the joint venture operations’ volumes remained stable at 271 000 oz.  

Third-party purchased volumes declined by 10% to 169 000 oz.

Group refined production of 1.48-million ounces, including saleable production from Impala Canada, declined by 9% year-on-year.

Implats says smelting capacity at its South African operations in the reporting six months was constrained by an increased occurrence and severity of load curtailments, and was exacerbated by the start of a scheduled rebuild of a furnace in Rustenburg.

The estimated impact of Eskom load curtailment on concentrate and refined production was about 9 000 oz and 38 000 oz, respectively.

Implats finished the interim period with about 140 000 oz of excess inventory.

The company says it has benefited from the geographical diversification of its production portfolio and initial contributions from a suite of expansion projects across the asset base during the period, despite the challenging global macroeconomic and operating environment.

Implats explains that notable rand depreciation has resulted in additional inflationary pressure, which compounds the impact of high energy and consumables costs on the translated cost and capital expenditure (capex) at the Zimbabwean and Canadian operations.

Nonetheless, Implats says PGM prices remain robust, with strong demand for primary products, which supports the company’s free cash flow generation and earnings.

Sales volumes declined by 2% year-on-year to 1.52-million ounces, but benefitted from some destocking of refined inventory to offset the impact of furnace maintenance.

The 9% decrease in the dollar basket price was offset by a 16% weakening of the rand, resulting in a 5% improvement in group sales revenue to R38 117/oz sold.

Group capex is expected to total R5-billion for the period under review, compared with R3.6-billion in the prior comparable period. This was owing to higher rates of replacement project spend across the group, with growth capital of R700-million incurred in the period.

Group unit costs per 6E ounce are expected to increase to about R19 350 on a stock-adjusted basis owing to inflationary pressures, the impact of rand depreciation on the translated dollar cost base of Zimplats and Impala Canada, and the final payment of the previously signalled discretionary employee bonus in recognition of the Group’s strong financial performance in the 2021 financial year, which contributed about R420/oz.