Johannesburg - Listed platinum miner Royal Bafokeng will make a loss in the first half of the year, reversing its previous profitable position.
The miner, owned by the wealthy Bafokeng nation in Phokeng, in the North West, made this announcement to shareholders today in accordance with JSE rules that specify that a company must alert shareholders as soon as it is aware that earnings will differ by more than 20% from the previous comparative period.
Royal Bafokeng says, in the six months to June, its loss and headline loss per share per share will be between 52c and 69c.
This represents a decline of between 144.8% and 159.5%, compared to headline and earnings per share of 116c a year ago.
The company says the decline is due to a lower realised revenue basket price, the impact of a once-off current and deferred tax charge related to the settlement of a R110 million tax dispute with the South African Revenue Service and a stoppage after an accident caused a death.
Royal Bafokeng’s subsidiary, Royal Bafokeng Resources (RBR), reached the settlement last week, ending an issue around disputed tax assessments for the three years between 2008 and 2010,.
The settlement comprises of R50 million to be paid upfront, and R60 million to be paid in the future “when and to the extent that RBR moves into a net mining tax paying position which is not anticipated to occur before 2019”, the company said in a statement.
The company also, earlier this month, suspended operations at its Bafokeng Rasimone Platinum Mine’s (BRPM’s) south shaft after a contract employee, Kayalethu Sidumo, died after being struck by a scraper rope during scraping operations.
Royal Bafokeng’s earnings will also be lower because of reduced concentrator plant availability and output due to recurrent stoppages related to the increased frequency of blackouts as Eskom continues to be under pressure to keep the lights on. It has also experienced more unscheduled and higher costs caused by a five-year wage agreement that was above inflation.
Royal Bafokeng notes the wage deal is front-loaded, which should ease its effect in coming years.
Stripping out the tax settlement, earnings per share are expected to be between 4c and 2c compared with last year’s figure of 133c.
The company, which expects to release its interim results on 4 August 2015, has previously proven immune to the platinum industry woes recording decent production gains, modest profit and signing a five year wage deal.
IOL