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JOHANNESBURG - Black-owned Royal Bafokeng Platinum announced yesterday that it made a 106percent injection into its expansion capital expenditure for the year to December 2017 as part of the ramp up of its Styldrift project in North West.

The precious metals producer said the expansion capital expenditure increased 106.6percent to R2billion in line with the schedule for the ramp up of Styldrift. Styldrift is one of the few expansion projects in South Africa’s platinum industry. The company said that last year capex was R2.16bn, a 91.8percent increase year-on-year.

René Hochreiter, an analyst at Noah Capital, said the expansion came as Royal Bafokeng was bringing Styldrift online at a cost of R4.7bn to become a 150000oz/year producer.

The company will need an additional R1.6bn in capex to take production at Styldrift up to 230000oz/year by the third quarter of 2020, he said.

The Styldrift project is ramping up months after Royal Bafokeng acquired Maseve Investment assets, including a concentrator from Platinum Group Metals for $78million (R929m) in total. “The Maseve acquisition makes it much easier for Royal Bafokeng to ramp up production at Styldrift,” said Hochreiter yesterday.

In terms of financial highlights for the year, Royal Bafokeng’s cash position improved to R1.3bn from R835.5m in 2016.

Initiatives

The company reined in costs after restructuring and other cost-saving initiatives resulted in a 2.6percent reduction in the fixed component of cash costs to 71.8percent last year from 74.4percent in 2016.

Sibonginkosi Nyanga, an analyst at Momentum Securities, said: “Operationally the company did well. However, their bottom line was impacted by once-off costs.”

Headline earnings a share were down to 56.4cents a share or R108.8m last year compared to 86.7c or R166.7m in 2016.

The company described 2017 as a year of two halves, as by June it suffered a headline loss of R29.4m, reflecting the low R17745 per platinum ounce, combined with the impact of the restructuring costs.

It was on a path to recovery during the second half of the year, helped by the restructuring and the improvement of the average revenue basket price to R19156 per platinum ounce for the full year compared to R18906 per platinum ounce in 2016.

The headline earnings for 2016 of R166.7m included an attributable R46.9m once-off deferred tax credit relating to the tax effect of the housing capitalisation, while the headline earnings for 2017 included the after tax attributable effect of a restructuring charge of R23.6m. “In 2018 we will be ramping up our organic growth project, Styldrift I, to 150kt/m by year-end and incorporating Maseve into our business,” the company said.

The company has recorded no fatalities, but it said that in its fourth quarter operations it experienced an increase in the number of shifts affected by Section 54 notices issued by the Department of Mineral Resources.

It said that the increase followed the termination of the contract with Gupta-linked JIC Mining Services.

- BUSINESS REPORT