Implats delivered stellar results for its half year ended 31 December 2020 despite the challenges presented by navigating Covid-19. An improved safety performance underpinned operational momentum, while increased processing availability and the six month inclusion of contributions from Impala Canada allowed the Group to deliver higher sales volumes into robust rand PGM pricing and achieve record financial results.
Concentrate production at managed operations increased by 11% to 1.21 million 6E ounces, benefiting from the six-month contribution of Impala Canada, while the resolution of milling challenges experienced at both Mimosa and Two Rivers in the prior comparable period resulted in a 9% gain in 6E concentrate production volumes of 283 000 ounces from the joint ventures.
Third-party 6E concentrate receipts of 196 000 ounces were 3% higher and gross 6E concentrate volumes rose by 9% to 1.68 million ounces.
Gross refined output benefited from improved availability at Group processing assets following scheduled maintenance in the prior comparable period and the contribution of saleable ounces from Impala Canada. Refined 6E production increased by 29% to 1.69 million ounces with excess identified stock of 100 000 6E ounces expected to be released by the end of FY2021.
Inflationary pressures were compounded by the impact of the weaker rand on the cost base at Zimplats, additional expenditure due to Covid-19, the inclusion of the cash cost at Impala Canada, development to improve mining flexibility and targeted spend on asset integrity at Impala Rustenburg.
Total cash operating costs increased by 24% from the prior comparable period, while unit costs benefitted from higher volumes and increased by 9% on a stock adjusted basis to R14 292 per 6E ounce.
Pricing for the Group’s primary products was robust and, together with rand depreciation, drove a record financial performance at the group. Revenue more than doubled to R58.1 billion, gross profit increased to R22.4 billion, EBITDA of R25.1 billion rose three-fold and headline earnings increased by 328% to R14.4 billion.
The Group generated R20.1 billion of free cash flow after capital investment of R2.7 billion and ended the period with gross cash of R24.8 billion, net cash of R20.3 billion and liquidity headroom of R28.5 billion.
The factors driving current and future PGM demand and the characteristics of the economic impact of the pandemic continue to support Implats view that ultimately, the impact of Covid-19 will be cyclical rather than structural in nature.
A strong rebound in both demand and supply is expected in PGM markets in 2021. While the expected short-term deficits in palladium and rhodium have been moderated by the anticipated release of in-process concentrate inventory accumulated in 2020, they remain meaningful and lend support to elevated pricing.
The Group is pleased to largely reiterate the operational guidance provided with the FY2020 results release with upward adjustments reflecting the strong operational performance delivered in the six-month period.
Group refined production is estimated at between 3.2 and 3.5 million 6E ounces. Implats expects Group stock-adjusted operating costs of between R14 600 and R15 100 per 6E ounce and capital expenditure of between R5.8 and R6.2 billion.