Implats expects profit boost on strong PGM prices

JOHANNESBURG – Impala Platinum (Implats) said yesterday it was preparing to report an earnings boost of at least 20 percent for the year ended June 2020, as it rode the wave of the spectacular precious group metals (PGM) price environment.

Implats, which operates PGM mines in South Africa and Zimbabwe, said headline earnings and headline earnings a share would be higher than 2019 on improved PGM rand prices.

“A significant increase in the dollar basket price for PGMs, together with rand depreciation, has resulted in a higher rand PGM basket price received by the group during the period,” said the company. Implats is expected to publish a further trading statement, closer to the release of its annual financial results in September.

The PGM producer, with a market capitalisation of R122 billion, had recorded earnings and headline earnings a share of R3.03bn and R4.23bn respectively, in 2019. Basic earnings and earnings per share in the comparative period were R1.47bn and R2.05bn respectively.

Seleho Tsatsi, an investment analyst at Anchor Capital, said yesterday that the earnings in the PGM sector were expected to be strong in this upcoming set of results.

“That earnings growth should be driven by the continued strength that we’ve seen in the PGM basket, particularly palladium and rhodium, and the weaker rand this year. Those are the significant factors driving Implats’ earnings and earnings for the sector,” Tsatsi said.

PGM prices are benefiting from record highs achieved during the six months to March, resulting in an average PGM basket price of $1612 (R26482) an ounce, with palladium and rhodium again being the driving force.

Rhodium yesterday exchanged hands at $900 an ounce, while palladium traded at $2115 an ounce.

Implats announced in April that it had lost 26000 ounces of 6E-mine-market concentrate during the March quarter, due to the Covid-19 pandemic. The company also temporarily closed its Marula operation in Limpopo after identifying 19 positive cases, all of them asymptomatic.

In a dramatic brush with the law, Mark Munroe, the chief executive of Impala Rustenburg, was arrested in April for jumping the gun to get back into safe production during the national lockdown.

Munroe posted R60000 bail after contravening the lockdown regulations in recalling about 6 000 employees back to work.

Meanwhile, yesterday mining stocks had a strong rally on the JSE on stronger prices led by gold stocks, as gold touched $1883.99 an ounce. The Gold Mining Index jumped 3.29 percent to 5 961.33 points, and the Mining Index rose 2.46 percent to 53501.22 points. Tsatsi said the gold stocks were higher across the board as the gold price approaches $1900 an ounce.

“Outside of the gold sector, there continues to generally be a risk-on sentiment in equity markets, not just here on the JSE, but globally as well,” said Tsatsi.

Impala Platinum closed 4.24percent higher at R153.80 a share.


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