Implats sets production record (September 06, 2004)

Implats (IMPUY-O) produced a record 2 million oz. platinum in the fiscal year ended June 30, or 17% more than in the previous year.

The company posted an operating profit of US$428 million for the period, 13% less than a year earlier. The platinum price per ounce was higher; however, revenue per ounce was lower by 9%, owing to an increase in the value of the South African rand in relation to the U.S. dollar.

Sales revenue remained constant at 11.81 billion rand. The average exchange rate for the year was 6.88 rand to US$1 — up from 9.06 rand in the year ended June 30, 2003.

The platinum price varied between US$655 and US$937 per oz. The average realized platinum price was US$773 per oz. — up 30% from the previous year. The average cost per ounce of platinum produced was US$602.

The rand appreciated by 24%, causing earnings to decline by 13%. There was a return on assets of 24% and a gross margin of 36%. A dividend of US$3.06 per share (an increase of 4% over last year) will be paid on Sept. 27.

The company recorded increased production at its mines in Zimbabwe and northwestern South Africa. Implats operates four mines in total, Impala Platinum, Marula Platinum, Zimplats and Mimosa, and these contributed 66% of the profit. Impala Platinum produced 1.09 million oz. platinum; Zimplats, 84,300 oz.; and Mimosa, 52,800 oz.

Impala Refining Services contributed 13% to profit. The division processes third-party concentrates, optimizing the processing and refining capacity at the Impala mine. Refining operations operated in excess of their rated capacity.

During the year, Implats increased its ownership of Zimbabwe Platinum Mines by 32.9%, to 83.4%, and sold its stake in Barplats Investments.

Safety performance improved but was marred by 10 deaths at Implats’ various operations. The company is trying to improve on this. The reportable injury frequency rate was 2.75 per million hours worked.

In the next year, Implats has agreed to sell its 27.1% interest in Lonplats for US$800 million. The price represents an 8% premium over the market valuation at the time of the announcement of the sale. The sale is in compliance with the new mining law and will result in empowerment credits.