Dineo Faku
ROYAL Bafokeng Platinum (RBPlat) planned to raise R1.5 billion in equity for its Styldrift 1 project, it said yesterday, amid a negative investment climate that has been exacerbated by a six-week wage strike in the platinum sector.
Earlier yesterday, the company posted improved earnings for the year to December helped by rand weakness coupled with cost savings.
Headline earnings rose by 66.7 percent to R283.9 million and headline earnings a share rose 66 percent to R1.73.
Cash operating costs rose by 2 percent to R2.1bn and total capital expenditure fell 11.7 percent to R1.04bn.
RBPlat, which listed on the JSE in November 2010, said the equity would be raised through a combination of a R600m bookbuild offering and a R900m rights offer to qualifying shareholders.
“We as a board believe that now is the appropriate time to embark on capital raising for our Styldrift 1 project. One of the objectives is to increase liquidity and cash flow,” RBPlat chief financial officer Martin Prinsloo said during the results presentation yesterday.
“I can announce that the bookbuild is closed, we were oversubscribed at R62 a share.”
Rand Merchant Bank and Morgan Stanley were the joint bookrunners for the bookbuild.
Styldrift 1 is an R11bn project, of which R2.5bn has been funded to date.
RBPlat said it had an obligation to fund 67 percent of the project, and the difference would be funded through debt and cash flow from operations.
Styldrift 1 will double RBPlat’s output to more than 400 000 ounces a year and is due to start producing next year.
The mid-tier platinum producer has so far been unscathed by the six-week strike in the platinum belt.
The company is in the final year of a three-year wage deal that ends in June. Part of the deal included housing for employees, of which 400 houses will be built this year.
RBPlat chief executive Steve Phiri warned of the impact of the strike on the platinum industry. “We better get our house in order to assure there is security of supply. We are likely to see a substitution of the metal for autocatalytic converters. Recycling is now a competitor to primary supply.”
Highlights for the year included the renegotiation of a royalty agreement with Impala Platinum and a R1bn revolving credit facility from Nedbank.
RBPlat shares fell 1.3 percent to close at R63.56 yesterday.