ANGLO American Platinum (Amplats), the Anglo American plc subsidiary, expects headline earnings to soar by as much as 578 percent in the six months to the end of June amid buoyant metal prices and a boost in sales volumes.
Amplats, which operates several assets, including the Mogalakwena open pit mine in Limpopo, said yesterday that headline earnings would likely climb to R46.8 billion.
Basic earnings a share would likely be up by 600 percent, while earnings a share may be up to R17.7, Amplats said.
“The expected increase in headline earnings and basic earnings is primarily driven by a 29 percent increase in the rand basket price and an increase in sales volumes from own production excluding trading activities,” said Amplats.
Highlights for the second quarter of 2021 included the 59 percent increase in output to 601 500 ounces because of the strong recovery in production from all operations compared to the prior period, which was materially impacted by national lockdowns to curb the spread of Covid-19.
Refined platinum group metals (PGM) climbed by a staggering 233 percent to 1.353 million ounces because of operational stability following the rebuilding and recommissioning of the Anglo Converter Plant Phase A unit in November – which performed ahead of plan – following an explosion within the converter last year. PGM sales increased by 162 percent to 1.437 million ounces.
Amplats, however, tightened PGM production for 2021 to between 4.2 million and 4.4 million ounces as a result of lower third-party concentrate receipts and the continuing impact of Covid-19 on operations. Refined PGM production was revised up due to proven operational stability, to between 4.8 and 5 million ounces.
Chief executive of parent company Anglo, Mark Cutifani, said the group had delivered a solid operational performance supported by comprehensive Covid-19 measures to help safeguard the lives and livelihoods of its workforce and host communities.
“We have generally maintained operating levels at approximately 95 percent of normal capacity and, as a consequence, production increased by 20 percent compared to the second quarter of last year, with planned higher rough diamond production at De Beers, as well as strong plant performance at our Los Bronces copper operation in Chile and higher throughput at our Mogalakwena platinum group metals mine in South Africa,” said Cutifani.
Diamonds sparkled as rough diamond production increased by 134 percent to 8.2 million carats, reflecting planned higher production to meet stronger demand for rough diamonds, and the impact of lockdowns across southern Africa in the second quarter of last year.
Commenting on the operational update, Anchor Capital’s investment analyst, Seleho Tsatsi, said Amplats’s trading statement showed the benefit of higher PGM prices and a recovery in volumes following an operationally challenging 2020.
“Anglo’s share price has come under pressure as of late. For shareholders, a lot of focus will be on what Anglo and the rest of the sector does with the significant free cash flow it is generating at the moment,” said Tsatsi.
Amplats shares closed 2.75 percent higher at R1 660.14 on the JSE yesterday.