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Implats plunges on share-sale plan, profit slump

Johannesburg - Impala Platinum [JSE:IMP] slid the most in almost seven years after saying it plans to raise R4bn by selling shares as a slump in metal prices cut full-year profit by 58%.

Profits fell as much as 15% in Johannesburg and yields on the company’s dollar bonds reached a record. Impala is seeking to raise the cash to complete two new shafts at its Rustenburg operation, the world’s largest platinum mine, it said in a statement on Thursday.

The Johannesburg-based miner preferred selling shares after considering other options, chief financial officer Brenda Berlin told reporters on a conference call.

Platinum producers have cut jobs, closed shafts and delayed spending as prices dropped about 40% since 2011 to the lowest in six years. Impala’s earnings have also been hit by the cost of returning to normal production after a strike during the first half of 2014.

The company would’ve “survived for another two years without raising any capital but then they could have found themselves with their back against the wall,” Hurbey Geldenhuys, a mining analyst at Vunani Securities in Johannesburg, said by phone.

“This is mining, you can’t stop investing in a down cycle because you’ll miss out when prices turn.”

New shafts

Impala will continue to invest in new shafts because it sees long-term demand for platinum-group metals remaining strong, it said.

The shares dropped the most since November 2008 to the lowest since 2001, and were down 7.4% at R43.08 by 11:49 in Johannesburg. By 14:14 the price have recovered somewhat, trading 6.3% lower at R43.60.

Yields on the company’s dollar bonds maturing in February 2018 rose 11 basis points to 9.55%, the highest on record.

The miner has already secured fundraising support from about half of its shareholders including Coronation Fund Managers, Royal Bafokeng and Public Investment Corporation, South Africa’s largest money manager, it said. The share sale is being underwritten by UBS Group.


“We just don’t want to be overgeared in the current environment and stretch our balance sheet,” CFO Brenda Berlin said. Net debt totaled R4.1bn by June 30, the company said.

Cost cuts

Impala plans to save R1.6bn in costs while reducing capital expenditure for the 2016 fiscal year to R4.2bn from R4.5bn, CEO Terence Goodlace said. The company will close one shaft and sections of another operation at Rustenburg, he said.

Earnings excluding one-time items in the 12 months ended June 30 fell 58% from a year earlier to R221m. Gross refined platinum output gained 8.3% to 1.28 million ounces while the Rustenburg mine achieved its target of 575 000 ounces.

Performance “was severely impacted by the ramp-up of the Rustenburg operations” following the five-month strike, the company said. The temporary closing of its Bimha mine in Zimbabwe and power shortages in South Africa also disrupted operations, it said.

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