RBPlat shares slip after repairs reduce output

Published Oct 18, 2013

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Johannesburg - Royal Bafokeng Platinum (RBPlat) shares dipped yesterday after it reported that a planned plant shutdown hiked unit costs and sapped output in the quarter to September.

RBPlat posted a 13 percent drop in tons milled during the quarter to 540 000 from 621 000 tons a year earlier after the Bafokeng Rasimone platinum mine (BRPM) concentrator was shut for repairs over two weeks in August.

“Replacement of the primary mill discharge end at the BRPM concentrator during the quarter led to the concentrator being offline for 15 production days,” the company said in its quarterly production update yesterday.

Michael Kavanagh, an analyst at Noah Capital, said the production decline in the September quarter was “not a train smash” and that RBPlat had an opportunity to recover lost output. “The drivers of the company are that its projects are on schedule and on budget.”

He was referring to the BRPM III project which remained ahead of schedule and below budget with expenditure for the quarter of R40.2 million and R549m for the project to date. Meanwhile, the Styldrift expansion project was 34.6 percent complete.

Kavanagh said he had a hold recommendation for RBPlat, noting that the company was one of the better performers among its peers.

RBPlat reported a 16 percent drop in the UG2 tons milled in the period compared with the year-earlier period. However, there was an 11 percent improvement in the head grade to 4.41 grams a ton from 3.96 grams a ton.

Its cash unit costs per ton milled and per platinum ounce produced increased by 19 percent and 9 percent, respectively, compared with the previous corresponding period.

The capital expenditure for the period under review was 27 percent lower at R99.6m. The decrease in capital spending is a general trend among platinum producers who are grappling with tight cash flows as a result of rising costs.

RBPlat said previously that the repairs at the concentrator were implemented after a routine inspection found major wear and tear. An investigation revealed erosion of the trunnion by more than 50 percent.

About 90 218 tons of Merensky ore had been stockpiled ahead of the concentrator shutdown. It was anticipated that this ore will be treated within the next four to six months.

RBPlat shares closed 0.88 percent down at R58.79 yesterday, while the platinum index fell 0.18 percent. - Business Report

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