Impala Platinum (Implats), which has skipped a dividend payment for the year to June 2024, saw headline earnings dip by 87% to R2.4 billion amid weaker platinum group metals (PGM) prices, although chief executive Nico Muller is looking to possible interest rate cuts to drive positive economic sentiment, which in turn would be expected to boost buying behaviour.
Although the global market for PGM is projected to remain in deficit, Muller said during an earnings call yesterday that “a reduction in interest rates will create improved sentiment and incentivise buying behaviour” from key customers.
“I personally believe there will be support for PGM price increases when that happens. PGM prices are not driven only by market fundamentals but by global economic sentiment,” said Muller.
Implats and other PGM miners are struggling for profitability owing to persistently lower prices of the metals they mine. Moreover, PGM companies “continue to face challenging and sometimes competing stakeholder expectations from host communities, governments, organised labour and investors”, the company said yesterday.
Implats is nonetheless opting to prioritise labour stability as it engages other stakeholders.
During the year to end June 2024, Implats was affected by significantly weaker US dollar sales revenues that offset the benefit of strong operational delivery. It said average palladium and rhodium prices had dropped sharply, negating higher sales volumes and compressing operating margins as well as free cash flow.
Resultantly, headline earnings at R2.4bn for the period or 269 cents per share were 87% and 88% lower respectively. Basic earnings for the period tipped into a loss of R17.3bn against basic earnings of R4.9bn a year earlier.
“PGM pricing heavily impacted by industrial destocking and uncertain financial metrics were further impacted by impairments resulting from lower PGM pricing, several once-off cash and non-cash charges arising from the conclusion of the RBPlat and B-BBEE transactions, as well as the labour restructuring initiated during the period,” the company said.
Its current full year 2025 period had started off with the completion of the company’s labour restructuring. Implats was now set to deliver free cash flow despite the assumption of continued near-term PGM pricing weakness, with the firm’s suite of processing assets well capitalised and able to draw down previously accumulated inventory.
During the period under review, revenues in Implats decreased by 19% to R86.4bn. The company delivered a reduction of 4% in cost of sales to R80.9bn, helping it to a gross profit of R5.5bn.
Group 6E production increased 13% to 3.6 million ounces, with saleable 6E production increasing 14% to 3.3m ounces. The company’s 6E sales volumes amounted to 3.4m ounces, with unit costs rising 5% to R20 922 per ounce.
Implats had consolidated group capital expenditure of R14bn for the period, with earnings before interest, depreciation, tax and amortisation of R12.4bn.
This left Implats in a basic loss of R17.3bn or 1 929 cents per share, although free cash outflows amounted to R4bn. The company did not declare a dividend for the year to June 2024, with its stock marginally firming on the JSE on Thursday.
Implats milled 27.8m tons from own-managed operations, boosted by higher milled volumes at Zimplats and stable tonnage at Impala Rustenburg.
These higher tons offset the impact of rebased production volumes at Impala Canada and safety-impacted throughput at Marula. The company’s 6E milled grades rose 4% to 3.73 grams per ton on the back of consolidation of higher-grade volumes from Impala Bafokeng and improvements at Impala Rustenburg.
The group’s joint venture operations increased 6E concentrate production by 1% to 547 000 ounces, with the Mimosa mine in Zimbabwe, jointly owned with Sibanye-Stillwater, benefiting from plant optimisation. However, the Two Rivers operation had lower volumes due to constrained mining flexibility from challenging geological conditions.
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