JOHANNESBURG – Impala Platinum (Implats) on Monday surged nearly 10 percent after the group said it expected its profits to reach R2.1 billion in the six months ended December from a R150 million loss during the corresponding period last year.
The stock closed 7.92 percent higher at R41.82 after the miner said the improved performance was as a result of a higher rand Platinum Group Metals (PGM) basket price, as well as better safety and operational performances. It said its refined platinum production would increase by 10 percent to 800 000 ounces (oz) during the period from 727 000oz in 2017.
“The increase in refined platinum production is primarily due to a stock release of circa 44 000oz platinum and improved performance from Impala Rustenburg.
During the comparative period, refined production was impacted by an inventory build-up, following furnace maintenance undertaken during that period,” Implats said.
Implats is expected to release its interim results this month.
It said that its platinum sales volumes would increase 19 percent to 773 000oz from 649 000oz in the six months under review.
Implats is currently undergoing a strategic restructuring process. The company last year said it would cut 13 000 jobs over two years as part of its restructuring.
Wayne McCurrie of FNB Wealth and Investments described the trading update as upbeat.
“Impala Platinum 6 months massively beating all expectations.
"Profit will be at least 292 cents per share after a loss of 21c per share.
"The market is expecting 188c per share for the complete year,” McCurrie said.
A report by JPMorgan Cazenove has indicated that job losses, mine closures and the cut-back of thousands of platinum ounces were on the cards for South Africa’s platinum sector.
Professor Francis Petersen of the University of the Free State said although the platinum mining industry had proven to be more important than gold, it was battling in the face of global oversupply, depressed prices, and retrenchments.
“It seems as if this sector is split between high-risk, expensive underground mining (Impala, Lonmin, and Sibanye-Stillwater) and open-pit extraction (Anglo American Platinum), where economies of scale and mechanisation generate better efficiencies and return on investment,” Petersen said.
“Recently, there have been signs of an improvement in the basket price of PGMs; however, leadership in this sector has to be guarded against having a short-term focus versus understanding the fundamentals of the sector.”