Production at Implats crashes to a six-year low
February 20, 2009
By Justin Brown
Output at Impala Platinum (Implats) crashed to a six-year low of 878 000 ounces in the half-year to December as production at its key Impala lease area tumbled.
The group received less platinum concentrate to refine into metal from Aquarius Platinum, after an offtake agreement with the company ended, the mining house said yesterday.
Implats' unit cost per platinum ounce, excluding share-based payments, increased by 37 percent to R8 681 during the six months.
The group said production and cost performance had both been very disappointing.
"The poor production performance was due to a lack of focus on on-reef development at third-generation shafts and slower-than-anticipated delivery of our decline projects," Implats said.
David Brown, Implats' chief executive, said: "This was a tough [half-]year for Implats, however, we are confident that the markets will recover in the medium term and that strong growth will once again reassert itself.
"The key going forward is to ensure all ounces are profitable, production targets are met and costs are right-sized according to output. In the current difficult economic environment cash preservation has become our priority."
At the end of December Implats had R4.3 billion cash available, up from R2.3 billion a year earlier.
Total refined platinum group metal (PGM) production fell 15 percent to 1.5 million ounces.
Implats slashed its R23 billion capital expenditure over the next four years by 57 percent in response to the fall of PGM prices from a record high of almost $2 300 (R23 528) an ounce in March to $1 075 an ounce yesterday.
In the six months to December, Implats' dollar PGM basket price fell 8 percent to $2 408 an ounce from $2 622 a year earlier.
In rand terms, the group's PGM basket price increased 10 percent to R20 010 an ounce.
Implats slashed its interim dividend by 60 percent.
At the same time, it reduced its output forecast for the year to June by 11 percent to 1.7 million ounces and cut its output target for the year to June 2012 by 9 percent to 2.1 million ounces.
The group put a halt to developing its Marula Merensky and Leeuwkop projects.
During the half-year to December, Implats' revenue was marginally lower at R16.2 billion, compared to the previous period. Profit attributable to Implats shareholders rose 13 percent to R5.3 billion.
The operating profit margin decline from 46.7 percent to 45.7 percent.
Capital expenditure was R3.9 billion, up from R2.4 billion a year earlier.
Implats expected world demand for platinum to slip 5 percent to 6.8 million ounces this year.
Anglo Platinum is planning to cut its workforce by 10 000, while Lonmin is looking to trim as many as 6 600 jobs.
However, Bloomberg reported that Implats was not planning any job cuts.
Implats said that with the world's economies on "life support", it was increasingly difficult to forecast the outcome for this year.
"We believe the confidence needed to restore the health of this [platinum] market may prove elusive during the bulk of the year," Implats said.
Implats forecast an average platinum price this year of be¬tween $950 and $1 000 an ounce.
However, longer term the company is expecting the global market for platinum to move back into deficit and the platinum price to recover to about $1 500 an ounce.
Implats shares added 3.64 percent to R142.50.
The platinum mining sector gained 3.41 percent.
|
|
