JOHANNESBURG – Impala Platinum (Implats) shares strengthened 6.98 percent to R26.37 a share in early trade on the JSE yesterday, after the miner revealed that it was involved in early talks to sell its 1 Shaft in Rustenburg.
Impala chief executive Nico Muller said yesterday that the company was negotiating with potential bidders that had expressed interest in the mine that has been earmarked for closure as part of Implats plan to cut its loss-making operations.
“Implats has commenced a process to identify and engage with parties who may have an interest in, or have already expressed an interest in, acquiring Impala Rustenburg’s 1 Shaft which, as per the restructuring plan, is scheduled to be put on care and maintenance from April 2019,” Muller said in the miner’s production update for the quarter to end-September.
Muller said the company was also talking to third parties.
“In parallel to the 1 Shaft disposal process, Implats is continuing to engage with parties who may have an interest in, or have already expressed an interest in, the 100 percent outsourcing of 1 Shaft to a third-party contractor.”
Implats, the world’s second-biggest platinum producer, also announced that it had begun the process of cutting its workforce by 1 500 in the quarter with the shake-up of the business, which will see the cutting of a quarter of jobs.
“We remain steadfast in our resolve to eliminate high-cost production at this business, aligned with our lower future metal prices outlook,” said Muller.
Implats said it had achieved its highest first-quarter milling tonnage of 3.15 million tons during the quarter for the first time since 2013.
Output of refined platinum rose 8.2 percent to 369 000 ounces.
Rustenburg, where it intends to close unprofitable shafts, posted a much stronger operational performance.
Implats also posted a 14.2 percent improvement in revenue per platinum ounce received during the quarter to R28 355 per platinum ounce on the back of a weaker rand and improved prices of palladium and rhodium.
Wayne McCurrie, an analyst at FNB Wealth and Investments, said Impala production results painted a very good picture of the company, with higher revenue.
“Finally, it is taking the decision to close high-cost Rustenburg operations. Hopefully, this will be finalised next year,” he said.
In August, Implats announced the strategic restructuring plan that will see the business selling or closing five high-cost mines, resulting in the loss of 13 000 jobs out of the 40 000 workforce over the next two years.
The low platinum price environment, coupled with rising input costs, has put pressure on the platinum industry, with Impala’s competitor, Lonmin, also previously announcing 6 000 job cuts.
The company said it hoped to reduce the operating cost from R25 100 per platinum ounce in 2017 to less than R22 000 per platinum ounce by the 2021 financial year.
Implats closed 10.34 percent higher at R27.20 on the JSE on Wednesday.