JOHANNESBURG (miningweekly.com) ­– Platinum group metals (PGMs) mining company Implats on Thursday declared an interim dividend on solid results for the six months to December 31.

The JSE-listed company, headed by CEO Nico Muller, generated free half-year cash flow of R5-billion and headline earnings of R3.4-billion.

Sustained operating performances from mining operations, together with robust rand PGMs pricing during the period, offset short-term challenges associated with concentrator maintenance and constrained smelter availability, the company said in a release.

The strong cash flow and earnings facilitated the funding of the acquisition of Impala Canada through a combination of cash, a forward sale of metal and debt.

The group was also able to reinstate dividends, based on a payout ratio of free cash flow generated before growth capital of 30%.

The interim dividend of R1.25 an ordinary share will be paid on March 23. 

Safety remains the group's foremost priority. Despite 6% and 9% improvements in the total and lost-time-injury-frequency rates, respectively, Implats mourned the loss of three employees at its managed operations. 

The group's strategic re-positioning as a high-value, profitable and competitive PGMs producer was meaningfully advanced through initiatives to improve organisational effectiveness at key operations. In addition, a three-year wage settlement was secured with the Association of Mineworkers and Construction Union at Impala Rustenburg and Marula.

At Impala Rustenburg, the sustained improvement in cost performance, productivity and safety at 12 and 14 Shafts has resulted in these operations collectively meeting the internal targets set to avoid disposal or closure and we now expect to operate these assets for the foreseeable future.

While higher pricing has provided some medium-term life extension at 1 Shaft, 9 Shaft is likely to be closed in the short-term due to depleted mineable reserves.

The group delivered stable 6E in concentrate production of 1.53-million ounces, with group refined 6E production down by 17% on constrained smelter availability owing to a planned furnace rebuild at Zimplats. 

Rand PGMs pricing rose by 41% per ounce, offsetting a 16% decline in 6E sales volumes due to an increase in work-in-process metal inventories. Revenue improved by 19% to R28-billion, gross profit increased by more than 90% to R6.2-billion and headline earnings rose by 52% to R3.4-billion or 436c a share. Net cash generated from operating activities amounted to R6-billion for the six months. The incentivised early conversion of the dollar bond resulted in a R3.1-billion reduction in debt as 64.3-million Implats shares were issued in August 2019.

The benefit of this, together with the payment of residual debt at Zimplats, was partially offset by a bridging loan used to fund the acquisition of Impala Canada, and the Group ended the half-year in a net debt position of R1.9-billion.