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Royal Bafokeng Platinum rewards shareholders with R1.5bn interim dividend

Continues trend of blowout results from platinum sector.
The group’s assets are the only known significant shallow high grade Merensky resources and reserves still available for mining in South Africa. Image: Supplied

Continuing the trend of blowout results from the platinum sector, Monday saw Royal Bafokeng Platinum (RBPLat) announce a 322% leap in gross profit and a 163% improvement in Ebitda (earnings before interest, tax, depreciation and amortisation) for the half year to June 2021.

The share price has rallied since the start of the year on strengthening platinum group metal (PGM) prices and in anticipation of the group paying out a maiden dividend – which it did in March this year.

RBPlats has been the star of the platinum sector over the last year, recording a nearly six-fold increase in the share price since the low of the ‘Covid crash’ of March 2020, against some impressive rallies by other platinum counters, notably Impala Platinum and Anglo Platinum.

Paying out that maiden dividend in March this year has helped power the share price higher.

Read: Commodity boom sees Royal Bafokeng Platinum deliver stellar 2020 results

The group declared a 535 cents per share dividend for the interim period.

CEO Steve Phiri told Moneyweb the combination of strong PGM prices and improved operational performance accounted for the record-breaking results. The basket price for PGMs per ounce increased by 50.1% to R42 600.40 (H1 2020: R28 388.80), mainly driven by an increase in palladium and rhodium prices.

“The most satisfying aspect of these results is the performance of Styldrift [mine], which we built from scratch over a period of nearly 10 years.

“It’s now virtually at full production, and is the biggest twin shaft mine in the country, with shafts of eight and 10 metres in diameter going down about 7 000 metres, and underground it’s like a modern Sandton City. We’re extremely proud of this mine.”

Despite an improvement in tonnes hoisted and milled, and higher volumes of metals processed, the overall performance was below expectations with the Covid-19 pandemic disrupting operational and project construction performance in both the first and second quarters.

Operational performance was impeded by a fatality at Styldrift in December 2020, Eskom load shedding, and a slow post-Christmas ramp-up period due to increased Covid infection rates and the slow return of foreign workers due to the pandemic.

Total tonnes hoisted increased by around 21% for both Styldrift and Bafokeng Rasimone Platinum Mine (BRPM) to between 1 020 thousand tonnes (kt) and 1 138kt compared to the lockdown-impacted first half of 2020.

PGM production improved by 24.3% to 215.7koz of platinum, palladium, rhodium and gold (4E).

RBPlat mines PGMs in the Merensky and UG2 reefs on the Boschkoppie, Styldrift and Frischgewaagd farms in the Rustenburg area. These sites account for the last undeveloped Merensky reef on the Western limb of the Bushveld complex. RBPlat’s assets are the only known significant shallow high grade Merensky resources and reserves still available for mining in South Africa.

The group’s capex is focused on three main projects:

  • Increasing the number of stoping sections at Styldrift to 18, giving it flexibility to ramp up production and grade quality;
  • Completing the tailings storage facility at BRPM by the first quarter of 2022, at a cost of R97 million; and
  • The R75 million upgrade of the Maseve 180 000 tonnes a month concentrator, which has been beset by construction delays. The Maseve upgrade will be completed by the fourth quarter of 2021.

The concentrator upgrade will allow for the processing of higher volumes of UG2 ore, and improve overall production and metals recovery.

Production for the full year is expected to be between 4.6Mt and 4.75Mt at a 4E built-up head grade of between 3.90g/t and 3.93g/t. 4E ounce production is expected to be between 475koz and 485koz 4E metals for the year.

Total cash operating costs per 4E ounce for the group are forecast to be between R15 825 and R16 150.

Last week, Anglo Platinum announced a 28% increase in metal production for the first six months of the year, with earnings shooting up 385%.

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The results were announced before the market opened, and by market close RBP share price was down 8.5%. Any thoughts on the lack lustre response of the market?

If the mining law in SA is that the state owns what is beneath the ground and there is now case law against the Ingonyama Trust Board lease programme is unlawful, then why is this company still owned by the Royal Bafokeng and not the State or some form of Sovereign Wealth fund?

All the mines should be compelled to fund a stabilization fund in great times. It is the only way to stop the crazy swings. In good times the hired help and shareholders receive massive extra. In bad times shareholders receive nothing. In good times labor works overtime and receives bonuses, in bad times labor is retrenched and the hired help have their share options repriced.

Invariably it falls to taxpayers and shareholders to bear the burden in bad times.

Save some of the hired help’s Smarties, not like they had ANYTHING to do with the increased platinum price.

The deepest mine in SA is 4000m which is also the deepest mine in the world so where does your 7000m shaft system fit.

End of comments.

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