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Steve Phiri, Royal Bafokeng Platinum

Royal Bafokeng Platinum Limited (RBPlat) today, 1 August 2017, issued its results for the half-year ended 30 June 2017.

“Although we are pleased that the reporting period was fatality-free, it is disappointing that our other safety injury indicators signalled a regression year-on-year,” says Steve Phiri, Royal Bafokeng Platinum Chief Executive Officer. 

“Sustained engagement with our employees and securing the commitment of all stakeholders on improving our safety culture continues to be a core part of our daily operational activities.”

The headline loss of 15.3 cents per share (H1 F2016: headline profit of 77.8 cps) was largely attributable to:

A 9.8% lower realised average rand basket price for the six months ended 30 June 2017 

 

A once-off restructuring charge of ZAR57.1 million

 

Despite the lower rand basket price, the drop in revenues was contained to 3%, given that BRPM’s production volumes grew by 7.7% to 139.8koz (4E). 

Average cash operating costs were 7.5% higher, but were offset by the higher platinum production, thereby restricting the increase in cash operating costs per platinum ounce to ZAR15 913, well below CPI at 0.2%.
 
The gross profit margin reduced from 11.4% to 0.7%, occasioned by the lower net revenues combined with an 8.5% increase in total cost of sales to ZAR1 583 million.

Earnings before interest, tax and depreciation and amortisation (EBITDA) as a percentage of revenue decreased from 18.5% to 6.3% in the first half of 2017, mainly as a result of the lower revenues and restructuring costs.

At 30 June 2017 the RBPlat Group had cash and near-cash investments of ZAR1 664.5 million.

RBPlat successfully raised ZAR1.2 billion through the placement of convertible bonds and secured ZAR2 billion debt facilities in March 2017.

The debt facilities comprise a ZAR750 million seven-year term debt facility, a ZAR750 million five-year revolving credit facility and ZAR508 million of general banking facilities.

Total capital expenditure for the period under review increased by 63.8% to ZAR847 million compared to the corresponding period in 2016.

Replacement capital was reduced by ZAR33 million to ZAR10 million in line with reduced Phase III construction activities as the project nears physical completion.

Expansion capital expenditure increased by 86.1% or ZAR360 million to ZAR778 million, reflecting the accelerated construction activities related to the ramp-up phase at the Styldrift I project.

Stay-in-business capital expenditure increased by 5.4% to ZAR59 million compared to the same period in 2016 and amounted to 4.1% of operating expenditure.

Outlook

The platinum market is forecast to be in a modest surplus for 2017 and prices are expected to have limited upside.

RBPlat remains committed to achieving a zero harm operating environment by continuing to foster a resilient safety culture. Improving the safety performance will be a critical success factor, with specific focus on reducing injury frequency rate metrics to their historic performance levels and remaining fatality free.

“Our focus will be aimed at consolidating the strong operating performance achieved during the first half by securing further tangible gains in volume, grade and cost.  The restructured business is expected to enhance margins, while we continue to contain costs and defer non-essential capital expenditure. With cash and near cash investments of ZAR1 664.5 million, together with the ZAR2 billion debt facilities, RBPlat is well poised to take the business to the next phase, that of ramping up Styldrift to 150ktpm by end of 2018,”  concludes Phiri.

 

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