Implats to escalate investments in a series of big growth projects
JOHANNESBURG - IMPALA Platinum (Implats) said yesterday that it was in the process of approving two growth projects in Limpopo and Zimbabwe at a cost of R10 billion over four years.
Chief executive Nico Muller said the group planned to add a further 360 000 6E ounces to annual output by developing the Merensky project at the Two Rivers Mine in Limpopo for an estimated R5.7bn over four years as he announced a record interim dividend for the six months ended December.
Muller said that Implats was looking to expand output at Zimplats, its Zimbabwe asset, for $290 million (about R4.3bn).
“These projects are in the final stages of approval, and we are hoping that in the next few months we will be coming to the market with an announcement on both of them,” said Muller.
Muller said the projects had the potential to deliver 180 000 ounces additional each, were both shallow, mechanised and low risk, meaning that they ticked the boxes when it comes to the company's investment objectives.
Two Rivers is a joint venture with African Rainbow Minerals. Implats owns 46 percent of the asset and its funding contribution will be roughly R2.6bn.
Implats is the latest platinum group metals (PGM) producer to commit adding expansionary output after Anglo American Platinum on Monday unveiled a 10-year strategy to steadily expand production by 20 percent to 3.6m ounces from 3m ounces currently. Sibanye-Stillwater also committed R3.9bn towards the development of the K4 project in Rustenburg, which is expected to produce 250 000 ounces a year at steady state.
Muller said risks were very low, and that the industry had gone through a decade of under-investment.
“I think that we have got growing deficits in palladium and rhodium and there are prospects for improved demand for platinum given the growth in the hydrogen economy,” said Muller, adding that Implats' Rustenburg lease did not have an infinite life.
“We need to start developing ways to replace the life of mine in Rustenburg. Our preference is to do that through low cost ounces.”
Muller also said projects were long dated.
“I think unless as an industry we invest in new ounces we may be at risk of scaring investment away from PGMS,” said Muller.
Implats posted a 328 percent increase in headline earnings and declared a record interim dividend of R10 a share or R7.9bn on a strong production during the six months under review.
The group continued to benefit from higher received dollar PGM basket prices, the weaker rand and operational momentum, which resulted in higher sales volumes.
Despite uncertainty in the operating environment due to Covid19, revenue of R58.12bn increased 107 percent and dollar revenue per 6E ounce sold rose 55 percent to $2 197 per ounce.
The group reported a 10 percent increase in mine-to-market 6E concentrate production to 1.49m ounces.