Accident to cost Impala R1.5bn
August 28, 2009
By Justin Brown
Impala Platinum's accident at its Impala Lease 14 shaft in which nine people died will cost the mine about 150 000 ounces of platinum production worth nearly R1.5 billion over the next five years.
Implats chief executive David Brown said 50 000 ounces of platinum output would be lost this year as a result of the closure of the number 14 shaft and adjustments made to safety.
A further 20 000 ounces of platinum a year would be lost over up to five years as a result of adjustments to mechanised mining at the 14 shaft.
Brown said the adjustments would limit the Impala Lease area production to 950 000 ounces of platinum a year for about five years until replacement production could be found to increase output back to 1 million ounces a year.
The lost production could result in job cuts.
Implats has reported 11 fatalities during the year to June up from 10 mine deaths in the same period last year.
In the year to June, Implats' unit costs per platinum ounce rocketed by 32 percent to R9 129 as the group battled with lower output and problems at its Impala Lease area.
Persistent unit cost increases will crimp the group's profitability over the short and long term.
Barend Ritter, a Sanlam Investment Management resources analyst, said Implats' costs were rapidly escalating mainly as a result of the drop in production.
Implats' shares fell 4.6 percent on the JSE yesterday to close at R191.50. The platinum sector fell 3.46 percent.
Net profit for the year to June fell 66 percent to R6 billion. The decline in Implats' revenue was due to 10 percent lower sales and lower metal prices. Revenue plunged 31 percent to R26.1bn.
The total dividend a share declared for the year was R3.20, down 78 percent from the previous financial year.
Capital expenditure for the year to June was R6.9bn,an increase of 29 percent.
Most of the expenditure was spent on developing the Impala Lease's 16, 17 and 20 shafts, which will add 330 000 ounces of platinum a year.
Cash at the end of June stood at R3.3bn, down 68 percent from R10.4bn at the end of June last year.
The group's gross refined platinum output was 1.7 million ounces in the year to June, which was down 11 percent from the previous year.
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