Impala Platinum (Implats) on Thursday posted its highest dividend on record during the year to the end of June on elevated metal prices, and said it planned to boost its base metal refinery capacity and extend the life of Marula Mine in Limpopo.
Implats, which operates mines in South Africa, Zimbabwe (Zimplats) and Canada, said management planned to double its base metal smelting capacity.
Chief executive Nico Muller said Implats was conducting a study that sought to find the best way to increase refining capacity in the group, and this could take various forms, most likely a combination of increasing capacity in Springs and restarting the Zimplats facility.
“Our ambition for establishing a base metal refinery in Zimbabwe and Springs is to create buffer capacity to treat any metal as a consequence of maintenance or operational disruption and secondly to start preparing for a future world where it makes it easy to contemplate participating in any new projects, be it in South Africa or Zimbabwe,” said Muller.
Implats’s R10 billion investment in growth projects announced in February had received the greenlight from the board, Muller said.
The group would propose the extension of Marula’s life by 10 years at a board meeting scheduled for November.
Group chief operating officer Gerhard Potgieter said Marula had the highest operating margin given its low capital intensity.
“We are looking at extending Marula’s life by another 10 years. That will give us 20 years of life and a slight pick-up in its capacity. It will be short of 200 000 ounces a year. That is the size the ore body can handle. We believe with the margins that we see at the moment, it can pay for it from its cash flows,” said Potgieter.
The group was in the process of expanding Marula’s tailings storage facility and was testing new technologies to ensure increased productivity.
Implats ended the year essentially debt-free, with a substantial increase in cash balances and balance sheet headroom.
Headline earnings surged by 125 percent to R36.4bn, or R46.35 per share. A final dividend of R12 a share was declared, bringing the total dividend for the full year to the end of June to R22 per share.
Returns to shareholders were cash dividends of R17.7bn, including a R7.9bn interim and a R9.8bn final dividend, and repurchasing R8.6bn of South African convertible bonds and R200 million of odd-lot shares.
“If you look at total shareholder return that emanated from this year’s cash flows , I think was outstanding,” Muller said.
Cash flow jumped by 99 percent to R16.8bn in free cash flow, and gross profit was R53.5bn, up 130 percent from 2020.
Impala Rustenberg made a gross profit of R25.2bn, up from R8.9bn a year earlier, and contributed R17.3bn to group headline earnings, despite an increasingly complex and challenging social environment because of evolving labour dynamics.
“The current socio-economic and political environment clearly impact industrial relations, as do the fact that majority unions are not able to engage directly with their members through traditional mass meetings. All provide challenges in the run-up to the next round of wage negotiations in 12 months’ time,” said the group.
Implats shares closed 6.86 percent lower at R204.26 on the JSE yesterday.
BUSINESS REPORT ONLINE