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Impala Platinum swings to profit, delays closure of shafts

Surging metal prices help struggling miners.

South Africa’s Impala Platinum (Implats) on Thursday said it swung to an annual profit thanks to higher sales volumes, higher metals prices and improved performance at its Rustenburg mine.

A surge in the metals prices has thrown struggling South African mining companies a lifeline and the company also said it had delayed the closure of some of its shafts.

“What does happen in this environment is that it provides us with more flexibility and alternatives to the outright closure and termination of operations at shafts,” said CEO Nico Muller.

Shares in Implats were up 3% by 0850 GMT and the company said it would consider resuming dividend payouts in the next 12 to 24 months depending on market conditions.

The platinum miner reported headline earnings per share of 423 cents for the year ended June 30, compared to a loss of 171 cents a year earlier.

Implats said revenue rose 36% to R48.6 billion ($3.19 billion) on the back of higher sales volumes, higher metals prices and the weaker rand.

Net cash from operating activities soared to R10.7 billion from a loss of R1 million in the prior year.

Large surpluses of platinum and shrinking demand saw platinum prices crash to $751.25 an ounce last year but platinum has risen around 30% from those lows while palladium prices are up more than 80% over the same period.

A more than doubling this year in the value of rhodium, a byproduct of platinum, and a weak rand against the dollar have also helped boost earnings at South African miners.

Implats said it would contract out mining at its 1 Shaft, which was originally earmarked for closure in April 2019, after improvements in operational performance and higher metals prices.

The improved performance has also attracted more interest in 1 Shaft, which is the only shaft that was up for sale, Implats said.

The miner said if the current operational performance continues it may review its decision to close 12 Shaft – a move which it is now delaying by 12 months – after it turned profitable during the financial year.

“We have already delayed the potential closure of 12 Shaft by a year and under the current market conditions and if the performance continues to improve there will be no reason to close 12 Shaft,” said Muller adding that it still had sufficient reserves.

The firm has also delayed the closure of its 9 Shaft by around 9 months to the second half of 2020.

Last year, Implats said plans to restructure Rustenburg would cut about a third of the mine’s workforce – more than 13 000 jobs – over two years, and reduce the number of active shafts to six from 11, which would have cut the company’s output by about a third by 2021.

The company said it has reduced its employees by 1 300 so far.

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