Wrap Text
Consolidated interim results (reviewed) for the six months ended 31 December 2017
IMPALA PLATINUM HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1957/001979/06)
JSE Share code: IMP
ISIN: ZAE000175873
ADR code: IMPUY
ISIN: ZAE000083648
ISIN: ZAE000247458
(Implats or the Company or the Group)
Consolidated interim results (reviewed)
for the six months ended 31 December 2017
Key features for the year
Financial
- Gross profit of R733 million, compared to a gross loss in the prior period of R139 million
- Profit before tax of R193 million, compared to a pre-tax loss in the prior period of R238 million
- R250 million higher "additional profits tax" provision by Zimplats contributed to the loss after
tax of R164 million (December 2016: R328 million loss after tax)
- Headline loss per share of 21 cents: an improvement of 70.4%
- Gross cash at the end of the period amounted to R4.2 billion
- Committed (unutilised) banking facilities of R4.0 billion available
Operational
- Overall mining performances improved
- Gross platinum in concentrate production increased 13.3%
- Furnace maintenance resulted in a pipeline increase of 75 000 platinum ounces at Impala
- Gross refined platinum production decreased 6.7%
- Stock-adjusted Group unit cost increased by 5.5% to R24 055 per platinum ounce
Market
- Market fundamentals for platinum remain muted
- Market fundamentals for palladium and rhodium remain robust
- Rand revenue per platinum ounce sold was 4.2% higher and averaged R25 968 per ounce
Safety
- Safe production remains a challenge at Impala and Marula
- Six fatal incidents reported during the period
Strategic response
- Strategic review underway at Impala to assess optimal future positioning
- Section 189 restructuring process finalised at Impala (1 400 reduction in employees)
- Strong turnaround effected at Marula
- 15% interest acquired in Waterberg project with an option to increase to 50.01%
Group performance
Six Six
months months
ended ended
31 31
December December %
2017 2016 change
Operating statistics
Gross refined production
Platinum (000 oz) 726.7 778.5 (6.7)
Palladium (000 oz) 406.0 468.4 (13.3)
Rhodium (000 oz) 98.8 91.4 8.1
Nickel (tonne) 7 907 8 283 (4.5)
IRS metal returned (toll refined)
Platinum (000 oz) 115.7 -
Palladium (000 oz) 55.0 -
Rhodium (000 oz) 19.4 -
Nickel (tonne) 1 765 1 596 10.6
Sales volumes
Platinum (000 oz) 648.8 730.7 (11.2)
Palladium (000 oz) 369.7 463.6 (20.3)
Rhodium (000 oz) 100.3 94.2 6.5
Nickel (tonne) 6 283 7 173 (12.4)
Prices achieved
Platinum (US$/oz) 940 1 009 (6.8)
Palladium (US$/oz) 930 674 38.0
Rhodium (US$/oz) 1 156 672 72.0
Nickel (US$/t) 10 334 9 924 4.1
Consolidated statistics
Average exchange rate achieved (R/US$) 13.42 14.04 (4.4)
Closing exchange rate for period (R/US$) 12.38 13.74 (9.9)
Revenue per platinum ounce sold (US$/oz) 1 935 1 775 9.0
(R/oz) 25 968 24 921 4.2
Tonnes milled ex-mine (000 t) 9 944 9 262 7.4
PGM production (000 oz) 1 434 1 553 (7.7)
Capital expenditure (Rm) 1 903 1 592 19.5
Group unit cost per platinum ounce (US$/oz) 2 105 1 623 (29.7)
(R/oz) 28 206 22 797 (23.7)
Additional statistical information is available on the company's internet website
Commentary
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
Introduction
The Implats Group has delivered an improved performance at most operations for the half-year ended 31 December 2017,
but regrettably mourns the loss of six employees through work-related incidents.
Gross platinum in concentrate production for the Group increased by 13.3%, supported by a 7.4% increase in run-of-mine
tonnes milled and higher deliveries from third-party toll refining customers. After toll treated material was returned
to third-party customers, concentrate production was unchanged. Refined metal production was impacted by extensive
maintenance to the number 5 furnace at the Impala Rustenburg smelting complex. As a result, gross refined platinum
production decreased by 6.7% to 726 700 ounces, relative to 778 500 ounces in the comparable period.
The reduction in refined platinum ounces produced, combined with metal returns to third-party toll refining customers,
resulted in a decline of 11.2% in platinum ounces sold to 648 800 ounces, compared with 730 700 ounces in the previous
comparable period. This was offset by a 4.2% increase in the rand basket price, lower third-party concentrate purchases
by Impala Refining Services (IRS), and a modest 4.2% inflationary increase in cash operating costs resulting in a total
revenue of R17.28 billion, cost of sales of R16.55 billion, and a gross profit of R733 million for the period, compared
to a gross loss of R139 million for the prior comparable period.
A significantly higher "additional profits tax" provision by Zimplats increased the tax charge period-on-period by
R250 million, which was largely responsible for the Group recording a R164 million loss after tax compared to a profit
before tax for the six months ended 31 December 2017. Cash generated from operations before changes in working capital
improved from R2.0 billion in the comparable period to R2.9 billion for the period under review. However, net cash
decreased by some R3.5 billion during the period under review, largely due to R1.9 billion used in investing
activities and a R3.5 billion inventory cash outflow.
Gross cash at the end of the period amounted to R4.2 billion. In addition, the Group has committed (unutilised)
banking facilities of R4.0 billion available until June 2021.
Market fundamentals for platinum remain muted. An industrial market deficit of some 230 000 platinum ounces recorded
in calendar year 2017 is expected to revert in the short term to a balanced market due to lower requirements from the
automotive, jewellery and investment sectors. However, fundamentals for both palladium and rhodium are robust with
significant demand growth expected over the next few years from the automotive sector. The rand revenue per platinum
ounce sold for the period under review benefited from the improved palladium and rhodium fundamentals, recording a
4.2% increase from the prior corresponding period to average R25 968 per platinum ounce.
The first half of the year was characterised by an ongoing focus on the Group's strategic response to the persistently
low PGM prices with a view to improving business performance, with a particular emphasis on Impala. To this end, a
strategic review of the operation was announced at the Group's full-year results in September 2017, which is actively
advancing measures to refocus or close unprofitable areas and rebase the overhead cost structure as soon as practically
possible. Through this process, the Group aims to return Impala to profitability in a sustained low PGM price environment.
In addition, the Group succeeded in effecting a strong operational turnaround at Marula and acquired a 15% interest in
the Waterberg project during the period under review with an option to increase its stake to 50.01%.
Group safety review
Regrettably, five employees at Impala Rustenburg and one at Marula suffered fatal injuries at our operations during
the six months ended 31 December 2017. Following the end of the reporting period, another employee was fatally injured at
Impala Rustenburg during January 2018. The Implats board and management team express their sincere condolences to their
families and friends.
The Company will continue to provide support to the dependants of the deceased. Management, in collaboration with
officials from the representative union (AMCU), the Department of Mineral Resources (DMR) and the board health and safety
sub-committee instituted a number of leadership workshops and independent assessments to determine the root causes of each
incident as well as the overall decline in safety performance.
Safe production remains our top priority. Many individual business units across the Group continue to deliver
exceptional safety performance, setting new records. Currently, Implats has nine "safety millionaire" shafts and units
(units which have operated more than a million shifts without a fatality). Seven have operated for more than two years
without a fatal incident, five have achieved more than four years, and two have worked for more than 15 years without
a fatal incident. Our strategic focus will be on an improved safety performance at Marula and Impala Rustenburg in
particular.
Group operational review
The Group achieved encouraging period-on-period operational improvements over the past six months. Tonnes milled
increased by 7.4% from 9.3 million tonnes in the prior corresponding period to 9.9 million tonnes. Increased production
volumes from operations were supported by higher deliveries from third-party toll refining customers yielding an 13.3%
increase in platinum in concentrate from 766 200 ounces to 867 800 ounces. Very pleasing in particular was a 9.4% increase
in platinum in concentrate contribution from Impala Rustenburg, which produced 348 300 ounces compared to 318 400 ounces
in the prior corresponding period.
The unscheduled maintenance at Impala number 5 furnace resulted in a significant build-up of pipeline stock and a 6.7%
decline in refined platinum ounces produced to 726 700 ounces, compared to 778 500 ounces in the comparable period.
Managed operations
IMPALA
Improved operational efficiencies achieved during the first quarter of the financial year were negatively impacted by
mine stoppages emanating from five fatal incidents recorded at the operation during September and October 2017.
Notwithstanding, mill throughput increased by 12.4% to 5.7 million tonnes from the previous comparable period (H1 FY2017:
5.0 million), which was impacted by the temporary closure of the 14 Shaft decline section due to an underground fire and
a reduction in some UG2 panel lengths following a fall-of-ground incident at 1 Shaft. The higher milled production is
largely as a result of 14 Shaft ramping up after the fire (+480 000 tonnes), the 16 Shaft ramp-up (+255 000 tonnes), and
performance improvements at 11, 12 and 1 Shafts (+191 000 tonnes). This was offset to some extent by declining production
from old shafts (-392 000 tonnes) and weaker performances at 10 and 20 Shafts following safety incidents (-19 000 tonnes).
The PGE mill head grade deteriorated to 4.05 g/t (H1 FY2017: 4.15 g/t), largely due to planned rehabilitation work on
the "C" ore pass system at 16 Shaft and a 2.9 kilometre (25%) increase in lower-grade reef development to increase
mining face length. Rehabilitation of the "C" ore pass system necessitated dilution of reef with waste feed in the
remaining reef passes. The reduction in grade partially offset the increase in mill throughput, resulting in a net
9.4% increase in platinum ounce in concentrate production to 348 300 ounces (H1 FY2017: 318 400 ounces).
During the period, a major unscheduled furnace rebuild was undertaken on one of the three operating furnaces at the
smelting complex, which was necessitated by excessive wear. The build-up of pipeline stocks at Impala, amounting
to some 75 000 ounces of platinum, was directly as a result of the furnace maintenance and resulted in refined platinum
production declining 14.7% to 271 900 ounces (H1 FY2017: 318 700 ounces).
The increased production volumes, together with inflation, resulted in cash costs increasing by 11.3% to R8.27 billion
(H1 FY2017: R7.43 billion). However, the increase in pipeline stocks and consequent lower refined metal output resulted
in unit costs increasing by 30.5% to R30 405 per platinum ounce refined (H1 FY2017: R23 304). On a stock-adjusted
basis, unit costs increased by only 2.2% to R23 822 per platinum ounce refined, supported by higher levels of production.
Capital expenditure increased by 20.5% to R1.44 billion (H1 FY2017: R1.20 billion), of which R345 million was spent on
the two major replacement shafts, 16 and 20 Shafts. Combined, these two shafts are scheduled to produce approximately
310 000 ounces of platinum from 2022.
Project progress at 16 Shaft remains largely on schedule. However, immediately mineable face length at the end of the
reporting period was 1 085 metres, 22% below plan. Underground development is being accelerated to address this
shortfall. The number of stoping teams has increased to 59 against a plan of 63 and stoping team productivity averaged
331 m2 per team against a planned rate of 334 m2 per team. The rate of production at the end of the period was in line
with the project plan at 1.38 million tonnes per annum.
Challenging geological conditions and safety interruptions following a fatal incident at 20 Shaft have impacted the
project. Immediately mineable face length at the end of the reporting period was 1 599 metres, 15% below plan. The number
of stoping teams has increased to 54 against a plan of 58 and stoping team productivity averaged 251 m2 per team against
a planned rate of 327 m2 per team. Geological conditions resulted in an abnormally high panel loss ratio (26%) during
the period, which, together with the impact of the safety stoppage, affected team productivity. Consequently, the overall
rate of production at the end of the period was 8% below the plan of 1.2 million tonnes per annum.
Impala is focused on returning the business to profitability in a sustained low PGM price environment. To this end
a number of initiatives have been implemented to improve productivity and lower costs, including a Section 189 labour
restructuring process as announced in September 2017. The labour restructuring resulted in a reduction of 1 400 employees
by the end of the reporting period and will realise an annual saving of R350 million. In addition, a strategic review of
all the business units and overhead structures at Impala was initiated and is interrogating the investment case and
sustainability of individual shafts across the operation. The review includes a specific focus on optimising the cost
base, which may lead to further responses, such as harvesting and/or closing certain shafts.
The leadership team has been strengthened with the appointment of Mark Munroe as Chief Executive of this operational
unit. He has been specifically tasked to lead the strategic review at Impala Rustenburg and drive performance
improvements in safety, efficiencies, cost and capital project execution at the operation.
Subsequent to the end of the period under review, in February 2018, an electrical failure at the Impala Rustenburg
smelting complex triggered a fire at the number 5 furnace transformers. Repairs to the transformers are well advanced
and it is anticipated the production interruption will be approximately 10 weeks. In the interim, furnaces 3 and 4 are
treating Impala's run-of-mine production. However, with the number 5 furnace not available for some time, contingency
capacity is constrained and, as a result, approximately 60 000 platinum ounces of pipeline stocks are not expected
to be refined within the financial year, which will impact cash flow in this financial year.
IMPALA REFINING SERVICES (IRS)
IRS once again contributed significantly to the Group's bottom line, despite persistently low PGM prices. Refined
platinum production was maintained at 454 800 ounces (H1 FY2017: 459 800 ounces).
Platinum receipts from mine-to-market operations, at 317 000 ounces, were lower than the prior comparable period
(H1 FY2017: 330 000 ounces), on the back of lower receipts from Two Rivers. Third-party purchased receipts decreased
from 108 000 platinum ounces in the prior period to 86 000 ounces. A further 104 000 ounces were toll refined for
a customer.
ZIMPLATS
Tonnes milled remained consistent with the prior comparable period at 3.3 million tonnes (H1 FY2017: 3.3 million
tonnes) with all mining units sustaining exceptional operational performances. Platinum in matte production,
inclusive of concentrates sold to IRS, was similarly in line with the prior performance at 136 200 ounces
(H1 FY2017: 137 100 ounces).
Unit costs increased by 8.4% in dollar terms to US$1 336 per platinum ounce in matte (H1 FY2017: US$1 233), while
in rand terms unit costs increased by only 3.4% to R17 900 per platinum ounce in matte (H1 FY2017: R17 316), due
to a stronger rand exchange rate over the period.
The redevelopment of the Bimha Mine remains on schedule to reach full production in April 2018, while development
of the 2.2 million tonnes per annum Mupani Mine is progressing according to plan and is targeting ore contact by
May 2020, and full production from August 2025.
The new political dispensation in Zimbabwe is regarded as a positive development. Implats supports and shares
Zimbabwe's aspirations to grow and diversify its PGM industry and continues to engage with the Government of
Zimbabwe regarding its plans.
MARULA
Marula delivered a strong operational turnaround following a restructuring process implemented prior to the start of
the financial year. The period under review saw a significant decline in community disruptions, mitigated by continued
engagement processes by the Marula team and an intervention with the assistance of the DMR seeking to resolve the
community chrome dispute. Agreement was secured from all stakeholders through this process to restart the chrome
project in January 2018.
The operational recovery was impacted by safety stoppages following a fatal incident at the main underground operation
during the second quarter of the financial year. Tonnes milled increased by 3.5% to 941 000 tonnes (H1 FY2017: 909 000
tonnes), while the PGE head grade deteriorated marginally to 4.36 g/t (H1 FY2017: 4.42 g/t). As a consequence, platinum
in concentrate production was maintained at 43 200 ounces (H1 FY2017: 43 100 ounces), despite a reduction in total
employees of some 800 people following the restructuring process.
On the back of this performance, unit costs were contained to a 3.7% increase at R24 954 per platinum ounce in
concentrate (H1 FY2017: R24 060). Capital expenditure amounted to some R29 million for the period under review
(H1 FY2017: R58 million).
Although the overall improvement in production and financial performance at Marula is encouraging, continued
uninterrupted and profitable production is necessary to secure the future of the operation.
Non-managed operations
MIMOSA
Mimosa delivered another strong operational performance. Tonnes milled improved by 2.9% to 1.41 million tonnes
(H1 FY2017: 1.37 million tonnes), and the PGE head grade was maintained at 3.85 g/t. This resulted in platinum in
concentrate production increasing by 3.4% to 63 000 ounces (H1 FY2017: 60 900 ounces). Unit costs decreased by 3.9%
in dollar terms to US$1 479 per platinum ounce in concentrate (H1 FY2017: US$1 539).
The envisaged export levy on "unbeneficiated" platinum has been restructured and deferred by the Government of
Zimbabwe to 1 January 2019. Mimosa continues to consult with the Government of Zimbabwe on a range of important
investment and regulatory considerations and remains confident that a mutually beneficial outcome can be secured.
TWO RIVERS
The operational performance at Two Rivers was impacted by the planned mining of low-grade split-reef areas during the
period under review. Tonnes milled during the first half of the financial year decreased by 1.9% to 1.71 million tonnes,
compared to 1.75 million tonnes milled during the prior comparable period, which included 58 700 tonnes milled at a
neighbouring mine.
The PGE head grade was significantly lower at 3.70 g/t (H1 FY2017: 4.03 g/t) and platinum in concentrate production
consequently reduced by 13.8% to 83 400 ounces (H1 FY2017: 96 700 ounces). As a result of the lower concentrate
production, unit costs increased by 20.7% to R14 688 per platinum ounce in concentrate (H1 FY2017: R12 172). The
operation has initiated a project to secure improved capacity to maintain its platinum production profile while
mining split reef.
Mineral Resources and Mineral Reserves
There has been no material change to the technical assumptions, assessment criteria, and information relating to the
Group's Mineral Resource and Mineral Reserve estimates, as disclosed in the integrated report for the financial year
ended 30 June 2017.
The revised Implats Mineral Resource and Mineral Reserve statement, as at 30 June 2018, will provide the detailed
updated estimates.
Financial review
Revenue, at R17.3 billion for the half-year ended 31 December 2017, was R1.2 billion or 6.5% lower than the
comparative six months as a result of:
- A negative volume variance of R2.1 billion. Sales volumes declined due to the full rebuild of the number 5 furnace.
Smelter stocks increased significantly period-on-period, but were offset to some extent by a draw down of the refinery
- A positive dollar metal price variance of R1.7 billion resulting from the average dollar revenue per platinum ounce
sold, of US$1 935, being US$160 or 9.0% higher than the previous comparative period. The average prices achieved for
palladium, rhodium and nickel were 38.0%, 72.0% and 4.1% higher. Platinum was 6.8% lower.
- A negative R765 million exchange rate variance resulting from the average rand-dollar exchange rate of
R13.42/US$ being approximately 4.4% stronger than the R14.04/US$ achieved during the prior comparable period.
The resultant rand revenue per platinum ounce sold rose by 4.2% to R25 968.
Cost of sales, at R16.5 billion, decreased by R2.1 billion from the comparable six months. The main contributors to
this decrease were:
- The full rebuild of number 5 furnace at Impala Rustenburg resulted in a significant build-up of stock in the
period under review. The impact was a R2.4 billion additional decrease in cost of sales due to higher inventory levels.
- A R702 million decrease in the cost of metals purchased was due to lower volumes purchased by IRS from third-party
concentrate customers.
- The decreases described above were partially offset by an increase in cash operating costs of R1.1 billion to
R12.5 billion. After taking into account higher levels of production at Impala Rustenburg (9.4%) and once-off
voluntary separation costs, the increase in cash operating costs was contained at mining inflation of 4.2%, comprising
South African operations mining inflation of 6.2%, and Zimplats rand deflation of 3.3%.
As a result of the above, the Group generated a gross profit for the period of R733 million (H1 2017: R139 million
gross loss).
The Group made a R193 million profit before tax, an improvement on the comparable period's pre-tax loss of
R238 million. The improvement was achieved despite a negative impact from a fair value adjustment on IRS creditors
of R296 million due to an increase in metal prices at the end of the period, and once-off insurance proceeds of
R330 million in the prior period.
Significantly higher "additional profits tax" payable by Zimplats increased the tax charge period-on-period by
R250 million, which was largely responsible for the R164 million loss after tax compared to a profit before tax
for the six months ended 31 December 2017 (H1 2017: R328 million after tax loss).
Cash generated from operations (before changes in working capital) improved from R2.0 billion to R2.9 billion.
An increase in the value of inventories of R3.5 billion was largely responsible for the negative cash from operations
of R249 million (after changes in working capital). The increase in inventories, as reflected on the balance sheet,
was affected by net realisable value adjustments.
Taking into account further planned smelter maintenance, and the extra build-up in the pipeline post period end due to
the transformer fire referred to in the Impala operational review, it is expected that the build-up of inventory will
be realised over the next 18 months. To alleviate constraints on cash, given that the bulk of the cash operating costs
have been incurred, it was deemed prudent to forward sell some of the metals in the pipeline. In this regard, the Group
realised almost R1 billion in January 2018.
Some R400 million was spent during the period to acquire a 15% stake in the Waterberg project.
Capital expenditure amounted to R1.9 billion, of which R345 million was spent on 16 and 20 Shafts.
Gross cash at the end of the period under review amounted to R4.2 billion. Debt (excluding leases but including the
cross currency interest rate swap) amounted to R8.0 billion resulting in net debt at 31 December 2017 of R3.8 billion
(June 2017: R332 million net debt).
In addition, the Group has committed (unutilised) banking facilities of R4.0 billion which are available until June
2021. This excludes the Zimplats-specific facilities.
Given the continued cash conservation strategy, the board has resolved not to declare an interim dividend for the
six months ended 31 December 2017.
Market review (calendar years unless otherwise stated).
The platinum and palladium markets experienced fundamental industrial deficits of approximately 230 000 ounces and
720 000 ounces respectively during 2017. However, the outlook and sentiment for these metals are profoundly different.
The platinum deficit is expected to revert in the short term to a balanced market due to lower requirements from the
automotive, jewellery and investment sectors. Significant deficits for palladium are expected to be sustained over
this period on the back of increased usage in the automotive sector.
Platinum ended 2017 at US$927 per ounce, 2% higher than the opening LBMA trade price, and on average traded at
US$946 per ounce over the year, which was 4% lower than in 2016 (2016: US$987 per ounce). This was largely in response
to a fall in Chinese jewellery demand, lower Japanese investment demand, and growing negative diesel sentiment in
the important Western European automotive sector, which was partially offset by growing industrial demand.
In contrast, palladium ended the year at US$1 056 per ounce, 54% higher than the opening LBMA trade price, and
on average traded at US$869 per ounce over the year, which was 42% higher than in 2016 (2016: US$613 per ounce).
Despite further exchange traded fund (ETF) liquidations, persistently strong fundamentals from the North American
and Chinese automotive sector continue to support palladium's price performance, while speculative purchasing in
China is also likely to have played a part.
The rhodium price more than doubled in 2017, increasing by US$945 per ounce during the year. The price closed the
year at US$1 715 per ounce, some 123% higher than it opened on Johnson Matthey London trade. The metal traded at
US$1 109 per ounce on average over the year, 60% higher than in 2016 (2016: US$694 per ounce). Rhodium prices were
driven by strong fundamentals, especially from the automotive sector (in response to "real driving" emissions testing
in Western Europe, as well as China 5 emission standards) and the chemical industry.
2017 was another positive year for the automotive industry, with global light-duty vehicle sales estimated to have
reached 95.3 million units (up 2.4% from 2016) on the back of growth in Western Europe, China, Eastern Europe and Latin
America. This offset a slight loss in the United States (US) where light-duty vehicle sales reached 17.2 million units,
a 1.9% decline from 2016. Even though US sales were lower, automakers sold more sport-utility vehicles, crossovers and
pick-ups, which are more heavily loaded with palladium and rhodium. However, concerns remain that rising interest rates
could restrict credit availability this year, and a further decline in the US market to below 16 million units is
anticipated for 2018.
Western European light-duty vehicle sales held up better than expected during 2017, reaching 14.3 million units, a
2.5% increase from 2016. However, the news was not positive for platinum, as the diesel share in this market continues to
decline due to sustained anti-diesel sentiment. Nonetheless, battery electric vehicles have yet to make any significant
inroads into the gap created by the decline in diesel, as consumers in this region are switching to gasoline, thereby
compounding CO2 compliance issues and palladium deficits.
Chinese light-duty vehicle sales recorded 1.5% year-on-year growth, reaching 24.7 million units, a positive for both
palladium and rhodium demand. Japanese auto sales topped 5 million units for the first time in two years and increased
for the first time in three years. New auto sales in Japan rose by 5.3% during 2017 to 5.23 million units, led by new
minicar models.
Stronger vehicle sales favoured palladium as more gasoline engines were sold. Historically, lower palladium prices,
coupled with abundant Russian stocks, encouraged automakers and coaters to significantly engineer platinum out of gasoline
and some diesel catalyst systems. However, the market is beginning to seriously consider the overreliance on palladium,
and there is increasing research by both automakers and coaters into the reverse substitution of platinum in gasoline
three-way catalysts. There is already evidence that platinum is being reintroduced into some diesel systems, where it
had been partially engineered out.
The Chinese platinum jewellery market remains challenged. Retail sales dropped by approximately 5.5% last year,
after an 8.3% decline in 2016. However, the latest data from the Platinum Guild International (PGI) indicates that the
quarter-on-quarter contraction during 2017 is slowing and some PGI partner stores have started to show growth again.
The Indian market was particularly strong during 2017 with sales growing by approximately 35% during the year. The
latest figures from the US market show healthy sales on the back of ongoing PGI initiatives. Retail sales growth
in the US is expected to surpass the PGI's upper forecast of 7% for 2017. The Japanese market continues to be
challenged by the currently fashionable yellow gold trends, and the market may not reach the 2% PGI growth forecast
for 2017. Overall, platinum jewellery demand is expected to be flat year-on-year.
As in 2016, the low prices of platinum and rhodium during the first half of 2017 generated additional industrial
interest in these metals. The main drivers for this growth were the glass and chemical sectors. In contrast,
increasing palladium prices affected industrial requirements, with substitution and thrifting resulting in lower
palladium demand in the sector during the year.
Physical investment in small platinum bars was down in Japan year-on-year, but still accounted for net sales of
some 150 000 platinum ounces in 2017.
The platinum and palladium ETFs followed different paths during 2017. Platinum ETFs grew by 107 000 ounces, driven
by lower prices, while palladium ETFs liquidated 376 000 ounces, mainly due to profit taking. This was the third
consecutive year in which palladium ETFs experienced large liquidations, with the aggregate holding now becoming
constrained in supporting future market deficits.
The platinum paper markets (NYMEX/TOCOM) declined by 142 000 ounces during 2017, highlighting a bearish price outlook
for the metal. In contrast, palladium was the beneficiary of renewed speculative interest, with signs of growing
physical market tightness supporting a 1.13 million ounce increase in long positions during 2017.
The market fundamentals for palladium and rhodium were particularly strong during 2017 and are projected to remain
robust during 2018. In contrast, market fundamentals for platinum remain muted, with new heavy-duty diesel emission
regulations and South African supply cuts only anticipated to materially impact market fundamentals from 2020. We
expect the platinum market to be balanced during 2018, with a significant deficit of more than 1 million ounces in
the palladium market underpinned by greater usage in gasoline catalyst systems and lower ETF liquidations. The rhodium
market is forecast to be in a declining surplus, moving into a fundamental deficit, as both the automotive and
industrial sectors consume more metal.
Strategic response
The Implats strategy is aimed at improving the Group's competitive position and profitability in a sustained
low metal price environment.
Key focus areas include:
- Improved operational performance at Impala Rustenburg and an ongoing strategic review to assess optimal future
positioning in a low price environment.
- Ensuring profitability of the Marula mine or the suspension of operations.
- Enhancing the relative industry cost position of the Group's conventional mining operations.
- Optimised performance and profitability at low-cost Group assets.
- Developing a long-term portfolio of lower-cost, shallow, mechanisable assets.
To this end, measures to enhance improvements and strengthen the Group's strategic response have been introduced,
specifically at Impala Rustenburg where the transition to a more concentrated, lower-cost operation remains our
most pressing priority. The strategic review, which was announced at the Group's full-year results in September
2017, is critically assessing the investment case of each shaft within the prevailing metal price environment,
with the intention of refocusing or closing unprofitable areas and rebasing the overhead cost structure as soon
as practically possible. This may lead to some shafts being closed or harvested sooner than originally planned.
Through this process, Impala remains focused on returning the business to profitability in a low PGM price
environment.
Actions taken at Impala in the period under review include:
- 4 Shaft suspended from January 2018.
- 1 Shaft, 9 Shaft and 12 Shaft being harvested with effect from January 2018.
- 10, 11 and 14 Shaft optimisation projects initiated during the review period.
- Section 189 restructuring process announced in September 2017.
As a result of these actions, it is estimated the operation will improve cash flow by more than R1 billion over the
next two years. However, the production outlook for 2018 will be negatively impacted by both early closure and harvesting
of some shafts, as well as the slower ramp up of 20 Shaft. Full-year guidance has reduced from approximately 700 000
platinum ounces to between 650 000 and 670 000 platinum ounces for the financial year. Further work over the next few
months will prioritise additional cost and efficiency improvements and longer-term life-of-mine (LOM) profiles for each
shaft in line with the revised operating mandate. There will be an intense focus on rebasing the support infrastructure
and associated cost base to sustain the resulting LOM profile at the operation.
At Marula, restructuring processes implemented prior to the start of the financial year have already delivered an
improved cost and operational performance. Tonnes milled per employee costed, has improved significantly from 392 tonnes
per annum during the prior corresponding period to 485 tonnes for the period under review. Similarly, the operation has
recovered from a gross loss of some R173 million in the prior corresponding period, to record a gross profit of
R68 million during the half year ended 31 December 2017. Further work over the next few months will prioritise: measures
to bed down improvements; securing operational continuity; and acquiring additional tailings deposition capacity
(required from 2020).
Longer term, the acquisition of a minority interest in the Waterberg development project, with the option to acquire
majority ownership on completion of the feasibility study, has advanced the Group's stated strategy to diversify the
asset portfolio from deep, labour-intensive conventional operations. In addition, the changing political dispensation
in Zimbabwe is being assessed and may offer further opportunities to the Group.
IRS remains an important strategic advantage and the Group will continue to seek further opportunities to build on its
successful business model, leveraging spare processing capacity within the Group.
Prospects
The challenges and uncertainties confronting the South African PGM industry remain significant. The market fundamentals
for platinum are only expected to strengthen materially from 2020 onwards, with the introduction of stricter heavy-duty
diesel emission regulations, and with supply from South Africa starting to taper off. However, the market fundamentals
for palladium and rhodium remain robust, supported by growing gasoline automotive demand, and the introduction of real
driving emissions in Western Europe and China 5 emission standards. The Group, therefore, expects large fundamental
deficits for palladium to be sustained well into the future, with platinum trading in a balanced market near term, and
rhodium availability becoming increasingly constrained.
As a consequence, dollar metal prices should remain positive for palladium and rhodium, while platinum is likely to
remain muted. This view will support near-term rand metal prices, but political changes in South Africa are likely to
support the local currency (ZAR), which in turn will impact on rand metal basket prices. We are therefore working on
the premise that the PGM rand basket could remain flat over the remainder of 2018 and 2019.
With the rand basket price expected to remain low, Implats will continue to prioritise measures to achieve safe
production, lower operating costs, preserve cash, enhance productivity, and restore profitability at all operations.
The new 2022 convertible bond, listed in late July 2017, will enable the redemption of the old 2018 bond and will
provide approximately R2 billion in additional liquidity.
Further measures to bed down improvements and strengthen the Group's strategic response have been introduced,
specifically at Impala Rustenburg where the transition to a more concentrated, lower-cost operation remains
our most pressing priority. The strategic review, announced at the Group's full-year results in September 2017,
is actively advancing measures to refocus or close unprofitable areas, and rebase the overhead cost structure at
the operation as soon as practically possible. This may lead to shafts being harvested and/or closed sooner than
originally planned. Through this process, a return to profitability in a low metal price environment is being
targeted for both the managed South African operations.
Full-year production estimates are revised as follows:
- Rustenburg 650 000 - 670 000 platinum ounces in concentrate
- Zimplats 255 000 - 265 000 platinum ounces in concentrate
- Two Rivers 165 000 - 175 000 platinum ounces in concentrate
- Mimosa 115 000 - 120 000 platinum ounces in concentrate
- Marula 80 000 - 90 000 platinum ounces in concentrate
- IRS (third party) 250 000 - 260 000 platinum ounces in concentrate
The full-year refined production for the Group is estimated at 1.5 million platinum ounces, subject to the rate at
which the pipeline can be reduced.
The Group's operating cost is expected to be between R23 600 and R24 200 per platinum ounce on a stock-adjusted
basis for the full financial year, with Group capital expenditure forecast at R4.7 billion.
The financial information on which this outlook is based has not been reviewed and reported on by Implats' external
auditors.
Changes to the board
During the period under review the following changes were made to the board:
- 7 July 2017 - resignation of Dr Nkosana Moyo as independent non-executive director with immediate effect
- 28 August 2017 - resignation of Ms Albertinah Kekana as non-executive director with immediate effect
- 28 August 2017 - appointment of Mr Udo Lucht as non-executive director with immediate effect
- 21 November 2017 - resignation of Ms Brenda Berlin as executive director and chief financial officer with effect
from 28 February 2018
- 27 November 2017 - appointment of Ms Lee-Ann Samuel as executive director with immediate effect
Approval of the financial statements
The directors of the Company are responsible for the maintenance of adequate accounting records and the preparation of
the interim financial statements and related information in a manner that fairly presents the state of the affairs of
the Company. These interim financial statements are prepared in accordance with International Financial Reporting
Standards and incorporate full and responsible disclosure in line with the accounting policies of the Group which are
supported by prudent judgements and estimates.
The interim financial statements have been prepared under the supervision of the chief financial officer,
Ms B Berlin, CA(SA).
The directors are also responsible for the maintenance of effective systems of internal control which are based on
established organisational structure and procedures. These systems are designed to provide reasonable assurance as
to the reliability of the financial statements, and to prevent and detect material misstatement and loss.
The interim financial statements have been prepared on a going-concern basis as the directors believe that the Company
and the Group will continue to be in operation in the foreseeable future.
The interim financial statements as set out below have been approved by the board of directors and are signed on
their behalf by:
Dr MSV Gantsho NJ Muller
Chairman Chief executive officer
Johannesburg
1 March 2018
Independent Auditor's Review Report On Interim Financial Statements
To the Shareholders of Impala Platinum Holdings Limited
We have reviewed the condensed consolidated interim financial statements of Impala Platinum Holdings Limited in
the accompanying interim report, which comprise the condensed consolidated statement of financial position as at
31 December 2017 and the related condensed consolidated statements of comprehensive income, changes in equity and
cash flows for the six months then ended, and selected explanatory notes.
Directors' Responsibility for the Interim Financial Statements
The directors are responsible for the preparation and presentation of these interim financial statements in accordance
with the International Financial Reporting Standard, (IAS) 34 Interim Financial Reporting, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial
Reporting Standards Council and the requirements of the Companies Act of South Africa, and for such internal control as the
directors determine is necessary to enable the preparation of interim financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express a conclusion on these interim financial statements. We conducted our review in
accordance with International Standard on Review Engagements 2410, Review of Interim Financial Information Performed
by the Independent Auditor of the Entity. ISRE 2410 requires us to conclude whether anything has come to our attention
that causes us to believe that the interim financial statements are not prepared in all material respects in accordance
with the applicable financial reporting framework. This standard also requires us to comply with relevant ethical
requirements.
A review of interim financial statements in accordance with ISRE 2410 is a limited assurance engagement. We perform
procedures, primarily consisting of making enquiries of management and others within the entity, as appropriate, and
applying analytical procedures, and evaluate the evidence obtained.
The procedures in a review are substantially less than and differ in nature from those performed in an audit conducted
in accordance with International Standards on Auditing. Accordingly, we do not express an audit opinion on these
interim financial statements.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed
consolidated interim financial statements of Impala Platinum Holdings Limited for the six months ended 31 December 2017
are not prepared, in all material respects, in accordance with the International Financial Reporting Standard, (IAS)
34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee
and Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the
Companies Act of South Africa.
PricewaterhouseCoopers Inc.
Director: CS Masondo
Registered Auditor
1 March 2018
Consolidated statement of financial position
As at As at As at
31 December 31 December 30 June
2017 2016 2017
(Rm) Notes (Reviewed) (Reviewed) (Audited)
Assets
Non-current assets
Property, plant and equipment 5 47 043 48 437 47 798
Exploration and evaluation assets 385 385 385
Investment property 90 173 89
Investment in equity-accounted entities 6 3 797 3 343 3 316
Deferred tax 373 - 389
Other financial assets 341 321 327
Derivative financial instruments 7 - 907 -
Prepayments - 10 073 -
52 029 63 639 52 304
Current assets
Inventories 8 11 147 8 760 8 307
Trade and other receivables 3 998 4 355 3 736
Other financial assets 2 2 2
Prepayments 846 814 1 293
Cash and cash equivalents 4 208 5 419 7 839
20 201 19 350 21 177
Total assets 72 230 82 989 73 481
Equity and liabilities
Equity
Share capital 20 451 20 044 20 000
Retained earnings 22 819 30 829 22 982
Other components of equity 3 216 4 392 3 825
Equity attributable to owners of the Company 46 486 55 265 46 807
Non-controlling interest 2 331 2 478 2 425
Total equity 48 817 57 743 49 232
Liabilities
Non-current liabilities
Deferred tax 3 830 7 766 4 390
Borrowings 9 7 610 7 987 8 373
Derivative financial instrument 7 676 - 1 233
Sundry liabilities 305 402 356
Provisions 1 124 1 062 1 099
13 545 17 217 15 451
Current liabilities
Trade and other payables 7 234 6 401 6 902
Current tax payable 1 112 791 702
Borrowings 9 1 418 735 1 088
Other financial liabilities 73 70 74
Sundry liabilities 31 32 32
9 868 8 029 8 798
Total liabilities 23 413 25 246 24 249
Total equity and liabilities 72 230 82 989 73 481
The notes below are an integral part of these condensed interim financial statements.
Consolidated statement of profit or loss and other comprehensive income
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2017 2016 2017
(Rm) Notes (Reviewed) (Reviewed) (Audited)
Revenue 17 280 18 484 36 841
Cost of sales 10 (16 547) (18 623) (37 370)
Gross profit/(loss) 733 (139) (529)
Other operating income 25 445 1 191
Other operating expenses (343) (54) (325)
Impairment (30) - (10 229)
Royalty expense (179) (260) (561)
Profit/(loss) from operations 206 (8) (10 453)
Finance income 201 196 411
Finance cost (535) (385) (811)
Net foreign exchange transaction gains 249 133 154
Other income 352 120 398
Other expenses (468) (529) (883)
Share of profit of equity-accounted
entities 188 235 496
Profit/(loss) before tax 193 (238) (10 688)
Income tax (expense)/income (357) (90) 2 590
Loss for the period (164) (328) (8 098)
Other comprehensive income/(loss),
comprising items that may subsequently
be reclassified to
profit or loss:
Available-for-sale financial assets 13 13 14
- Deferred tax thereon (2) (3) (3)
Share of other comprehensive income of
equity-accounted entities (106) (125) (219)
- Deferred tax thereon 11 12 22
Exchange differences on translating
foreign operations (710) (900) (1 555)
- Deferred tax thereon 92 117 203
Other comprehensive income/(loss),
comprising items that will not be
subsequently reclassified to
profit or loss:
Actuarial loss on post-employment
medical benefit - - 2
- Deferred tax thereon - - -
Total comprehensive income/(loss) (866) (886) (1 536)
Profit/(loss) attributable to:
Owners of the Company (163) (371) (8 220)
Non-controlling interest (1) 43 122
(164) (328) (8 098)
Total comprehensive income/(loss)
attributable to:
Owners of the Company (772) (1 140) (9 554)
Non-controlling interest (94) (74) (80)
(866) (1 214) (9 634)
Earnings per share (cents per share):
- Basic (23) (52) (1 145)
- Diluted (23) (51) (1 145)
For headline earnings per share refer note 12.
The notes below are an integral part of these condensed interim financial statements.
Consolidated statement of changes in equity
Share-
Ordinary Share based Total share Retained
(Rm) shares premium payments capital earnings
Balance at 30 June 2017 18 17 614 2 368 20 000 22 982
Bond conversion option (note 7) - 450 - 450 -
Shares purchased - Long-term Incentive Plan - (71) - (71) -
Share-based compensation expense
- Long-term Incentive Plan - - 72 72 -
Total comprehensive income/(loss) - - - - (163)
Loss for the year - - - - (163)
Other comprehensive income/(loss) - - - - -
Balance at 31 December 2017 (Reviewed) 18 17 993 2 440 20 451 22 819
Balance at 30 June 2016 18 17 252 2 277 19 547 31 200
Shares issued
- Employee Share Ownership Programme - 479 - 479 -
Shares purchased - Long-term Incentive Plan - (35) - (35) -
Share-based compensation expense
- Long-term Incentive Plan - - 53 53 -
Total comprehensive income/(loss) - - - - (371)
Profit/(loss) for the year - - - - (371)
Other comprehensive income/(loss) - - - - -
Transactions with non-controlling interest - - - - -
Dividends - - - - -
Balance at 31 December 2016 (Reviewed) 18 17 696 2 330 20 044 30 829
Balance at 30 June 2016 18 17 252 2 277 19 547 31 200
Shares issued
- Employee Share Ownership Programme - 479 - 479 -
Conversion option settlement - (79) - (79) -
Shares purchased - Long-term Incentive Plan - (38) - (38) -
Share-based compensation expense
- Long-term Incentive Plan - - 91 91 -
Total comprehensive income/(loss) - - - - (8 218)
Profit/(loss) for the year - - - - (8 220)
Other comprehensive income/(loss) - - - - 2
Transactions with non-controlling interests - - - - -
Dividends - - - - -
Balance at 30 June 2017 (Audited) 18 17 614 2 368 20 000 22 982
* The table above excludes the treasury shares.
The notes below are an integral part of these condensed interim financial statements.
Consolidated statement of changes in equity continued
Attributable to:
Foreign
currency Other Owners Non-
translation components of the controlling Total
(Rm) reserve of equity Company interest equity
Balance at 30 June 2017 3 745 80 46 807 2 425 49 232
Bond conversion option (note 7) - - 450 - 450
Shares purchased - Long-term Incentive Plan - - (71) - (71)
Share-based compensation expense
- Long-term Incentive Plan - - 72 - 72
Total comprehensive income/(loss) (620) 11 (772) (94) (866)
Loss for the year - - (163) (1) (164)
Other comprehensive income/(loss) (620) 11 (609) (93) (702)
Balance at 31 December 2017 (Reviewed) 3 125 91 46 486 2 331 48 817
Balance at 30 June 2016 5 092 69 55 908 2 548 58 456
Shares issued
- Employee Share Ownership Programme - - 479 - 479
Shares purchased - Long-term Incentive Plan - - (35) - (35)
Share-based compensation expense
- Long-term Incentive Plan - - 53 - 53
Total comprehensive income/(loss) (779) 10 (1 140) (74) (1 214)
Profit/(loss) for the year - - (371) 43 (328)
Other comprehensive income/(loss) (779) 10 (769) (117) (886)
Transactions with non-controlling interest - - - 11 11
Dividends - - - (7) (7)
Balance at 31 December 2016 (Reviewed) 4 313 79 55 265 2 478 57 743
Balance at 30 June 2016 5 092 69 55 908 2 548 58 456
Shares issued
- Employee Share Ownership Programme - - 479 - 479
Conversion option settlement - - (79) - (79)
Shares purchased - Long-term Incentive Plan - - (38) - (38)
Share-based compensation expense
- Long-term Incentive Plan - - 91 - 91
Total comprehensive income/(loss) (1 347) 11 (9 554) (80) (9 634)
Profit/(loss) for the year - - (8 220) 122 (8 098)
Other comprehensive income/(loss) (1 347) 11 (1 334) (202) (1 536)
Transactions with non-controlling interests - - - 11 11
Dividends - - - (54) (54)
Balance at 30 June 2017 (Audited) 3 745 80 46 807 2 425 49 232
* The table above excludes the treasury shares.
The notes below are an integral part of these condensed interim financial statements.
Consolidated statement of cash flows
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2017 2016 2017
(Rm) Notes (Reviewed) (Reviewed) (Audited)
Cash flows from operating activities
Cash generated from operations 11 (249) 539 3 049
Exploration cost (2) (5) (8)
Finance cost (521) (313) (716)
Income tax paid (366) (367) (1 312)
Net cash (used in)/from operating activities (1 138) (146) 1 013
Cash flows from investing activities
Purchase of property, plant and equipment (1 903) (1 595) (3 432)
Proceeds from sale of property, plant and
equipment 13 27 49
Purchase of investment property (1) - -
Purchase of interest in associate - Waterberg 6 (408) - -
Purchase of available-for-sale financial assets - (3) (7)
Interest received from held-to-maturity
financial assets 3 4 7
Loans granted - (1) (1)
Loan repayments received - 15 15
Finance income 240 204 426
Dividends received 61 89 279
Net cash used in investing activities (1 995) (1 260) (2 664)
Cash flows from financing activities
Issue of ordinary shares - 479 479
Shares purchased - Long-term Incentive Plan (71) (35) (38)
Repayments of borrowings (341) (348) (4 593)
Cash from CCIRS - - 728
Proceeds from borrowings net of
transaction costs - - 6 278
Dividends paid to non-controlling interests - (7) (54)
Net cash (used in)/from financing activities (412) 89 2 800
Net (decrease)/increase in cash and
cash equivalents (3 545) (1 317) 1 149
Cash and cash equivalents at beginning of period 7 839 6 788 6 788
Effect of exchange rate changes on cash and cash
equivalents held in foreign currencies (86) (52) (98)
Cash and cash equivalents at end of period 4 208 5 419 7 839
The notes below are an integral part of these condensed interim financial statements.
Notes to the consolidated financial information
for the six months ended 31 December 2017
1. General information
Impala Platinum Holdings Limited ("Implats", "the Company" or "the Group") is one of the world's leading producers of
platinum and associated platinum group metals (PGMs). Implats is structured around five mining operations and a toll
refining business in Springs in the Gauteng province. The mining operations are located on the Bushveld Complex in
South Africa and the Great Dyke in Zimbabwe, the two most significant PGM-bearing ore bodies in the world.
The Company has its listing on the securities exchange operated by JSE Limited in South Africa, the Frankfurt Stock
Exchange (2022 US$ convertible bonds) and a level 1 American Depositary Receipt programme in the United States of
America.
The condensed consolidated interim financial information was approved for issue on 1 March 2018 by the board of
directors.
2. Basis of preparation
The condensed consolidated interim financial statements have been prepared in accordance with International Financial
Reporting Standard (IFRS), IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council,
requirements of the Companies Act, 71 of 2008, and the Listings Requirements of the JSE Limited.
The condensed consolidated interim financial statements should be read in conjunction with the annual consolidated
financial statements for the year ended 30 June 2017, which have been prepared in accordance with IFRS, and the
commentary included in the interim results.
The condensed consolidated interim financial statements have been prepared under the historical cost convention
except for certain financial assets, financial liabilities and derivative financial instruments which are measured at
fair value and some equity and liabilities for share-based payment arrangements which are measured using a binomial
option model.
The condensed consolidated interim financial information is presented in South African rand, which is the Company's
functional currency.
Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total
annual earnings.
3. Accounting policies
The principal accounting policies applied are in terms of IFRS and are consistent with those of the annual
consolidated financial statements for the year ended 30 June 2017.
4. Segment information
The Group distinguishes its segments between the mining operations, refining services, chrome processing and an
"all other segment."
Management has defined the operating segments based on the business activities and management structure within
the Group.
Capital expenditure comprises additions to property, plant and equipment (note 5).
The reportable segments' measure of profit or loss is profit after tax. This is reconciled to the consolidated
profit after tax.
Impala mining segment's two largest sales customers amounted to 13% and 8% of total sales (December 2016: 10% and 8%)
(June 2017: 11% and 10%).
Six months ended Six months ended Year ended
31 December 2017 31 December 2016 30 June 2017
(Reviewed) (Reviewed) (Audited)
Profit/ Profit/ Profit/
(loss) (loss) (loss)
(Rm) Revenue after tax Revenue after tax Revenue after tax
Mining
- Impala 6 685 (1 060) 7 078 (1 126) 14 604 (9 860)
- Zimplats 3 834 277 3 352 116 7 038 576
- Marula 1 242 (24) 971 (232) 1 616 (709)
Impala Refining Services 10 657 719 10 916 727 21 711 1 292
Impala Chrome 60 (2) 289 96 432 127
All other segments - (22) - (70) - 29
Inter-segment revenue (5 198) - (4 122) - (8 560) -
Total segmental revenue/loss
after tax 17 280 (112) 18 484 (489) 36 841 (8 545)
Reconciliation:
Share of profit of equity
accounted entities 188 235 496
Unrealised profit in stock
consolidation adjustment (274) (47) (51)
Additional depreciation on assets
carried at consolidation (15) (15) (23)
IRS pre-production realised
on Group 43 - 42
Net realisable value adjustment
made on consolidation 6 (12) (17)
Total consolidated loss after tax (164) (328) (8 098)
Six months ended Six months ended Year ended
31 December 2017 31 December 2016 30 June 2017
(Reviewed) (Reviewed) (Audited)
Capital Total Capital Total Capital Total
(Rm) expenditure assets expenditure assets expenditure assets
Mining
- Impala 1 442 37 688 1 197 46 134 2 472 35 696
- Zimplats 432 17 973 353 18 329 864 18 353
- Marula 29 2 878 58 2 456 113 2 582
Impala Refining Services - 7 562 - 7 508 - 8 402
Impala Chrome - 153 - 288 1 161
All other segments - 34 379 (16) 30 195 (16) 32 257
Total 1 903 100 633 1 592 104 910 3 434 97 451
Intercompany accounts
eliminated (32 168) (25 820) (27 361)
Investment in equity-
accounted entities 3 797 3 343 3 316
Mining right accounted
on consolidation 790 823 811
Unrealised profit in
stock, NRV and other
adjustments to inventory (822) (267) (736)
Total consolidated assets 72 230 82 989 73 481
5. Property, plant and equipment
Six months Six months
ended ended
31 December 31 December Year ended
2017 2016 30 June 2017
(Rm) (Reviewed) (Reviewed) (Audited)
Opening net book amount 47 798 49 722 49 722
Additions 1 903 1 592 3 434
Interest capitalised - 3 -
Disposals (5) (13) (22)
Depreciation (1 927) (1 867) (3 702)
Impairment (30) - -
Rehabilitation adjustment 4 (33) 16
Exchange adjustment on translation (700) (967) (1 650)
Closing net book amount 47 043 48 437 47 798
Capital commitment
Commitments contracted for 1 685 1 969 1 636
Approved expenditure not yet contracted 7 946 6 465 5 364
9 631 8 434 7 000
Less than one year 4 669 4 415 4 338
Between one and five years 4 962 4 019 2 662
9 631 8 434 7 000
This expenditure will be funded from internal cash flows and, if necessary, from borrowings.
6. Investment in equity-accounted entities
Six months Six months
ended ended
31 December 31 December Year ended
2017 2016 30 June 2017
(Rm) (Reviewed) (Reviewed) (Audited)
Summary- Balances
Joint venture
Mimosa 1 931 1 920 1 961
Associates
Two Rivers 1 361 1 336 1 260
Makgomo Chrome 69 62 70
Friedshelf 28 25 25
Waterberg 408 - -
Total investment in equity accounted entities 3 797 3 343 3 316
Summary movement
Beginning of the period 3 316 3 342 3 342
Addition - Waterberg 408 - -
Share of profit 240 215 472
Share of other comprehensive income (106) (125) (219)
Dividends received (61) (89) (279)
End of the period 3 797 3 343 3 316
Share of equity-accounted entities is made
up as follows:
Share of profit 240 215 472
Movement in unrealised profit in stock (52) 20 24
Total share of profit of equity-
accounted entities 188 235 496
Waterberg
During the period Implats acquired a 15% interest in Waterberg for $30 million (R408 million). Waterberg's
asset is a large scale platinum group metal ("PGM") resource with an attractive risk profile given its shallow
nature.
Implats exercises significant influence through board representation and therefore applies the equity method to
account for the investment. Implats has an option to increase its stake to 50.01% in Waterberg within 90 days
of the Waterberg shareholders approving the definitive feasibility study on the project.
7. Derivative financial instrument
Six months Six months
ended ended
31 December 31 December Year ended
2017 2016 30 June 2017
(Rm) (Reviewed) (Reviewed) (Audited)
Asset
Cross Currency Interest Rate Swap (2018) - 907 -
- 907 -
Liability
Cross Currency Interest Rate Swap (2022) 299 - 49
Conversion option - US$ convertible bond (2022) 377 - 547
Conversion option - ZAR convertible bond (2022) - - 637
676 - 1 233
Cross Currency Interest Rate Swap (CCIRS) (2022)
Implats entered into a CCIRS amounting to US$250 million to hedge the foreign exchange risk on the US$ convertible
bonds, being: exchange rate risk on dollar interest payments and the risk of a future cash settlement of the bonds at
a rand-dollar exchange rate weaker than R13.025/US$. US$250 million was swapped for R3 256 million on which Implats
pays a fixed interest rate to Standard Bank of 9.8%. Implats receives the 3.25% coupon on the US$250 million from
Standard Bank on the same date which Implats pays bond holders and the interest thereon. In June 2022, Implats will
receive $250 million for a payment of R3 256 million.
The CCIRS is carried at its fair value of R299 (June 2017: R49) million. Hedge accounting has not been applied.
Conversion option - US$ convertible bond (2022)
The US$ bond holders have the option to convert the bonds to Implats shares at a price of $3.89. The conversion
option is carried at its fair value of R377 (June 2017: R547) million.
Conversion option - ZAR convertible bond (2022)
The ZAR bond holders have the option to convert the bonds to Implats shares at a price of R50.01. At the general
meeting held by shareholders on 24 July 2017, the approval to settle this option by means of Implats shares was
obtained. This option meets the definition of equity and an amount of R625 million (R450 million after deferred
tax) was therefore accounted within equity as from 24 July 2017.
8. Inventories
Six months Six months
ended ended
31 December 31 December Year ended
2017 2016 30 June 2017
(Rm) (Reviewed) (Reviewed) (Audited)
Mining metal
Refined metal 708 328 350
In-process metal 4 526 2 848 2 977
Non-mining metal
Refined metal 1 269 1 520 993
In-process metal 3 882 3 234 3 252
Total metal inventories 10 385 7 930 7 572
Stores and materials inventories 762 830 735
11 147 8 760 8 307
The write-down to net realisable value comprises R82 (December 2016: R159) (June 2017: R78) million for refined
mining metal and R1 124 (December 2016: R1 167) (June 2017: R948) million for in-process mining metal.
Included in refined metal is metal on lease to third parties of 40 000 (December 2016: 36 000) (June 2016: 36 000)
ruthenium ounces.
Changes in engineering estimates of metal contained in-process resulted in a R431 (December 2016: R356)
(June 2017: R376) million increase of in-process metal.
Non-mining metal consists of IRS inventory. No inventories are encumbered.
9. Borrowings
(Rm) Six months Six months
ended ended Year ended
31 December 31 December 30 June
2017 2016 2017
(Reviewed) (Reviewed) (Audited)
Standard Bank Limited - BEE partners Marula 887 884 889
Standard Bank Limited - Zimplats term loan 1 053 1 168 1 111
Standard Bank Limited - Zimplats revolving
credit facility - - 314
Convertible bonds - ZAR (2018) 308 2 616 303
Convertible bonds - US$ (2018) 364 2 692 380
Convertible bonds - ZAR (2022) 2 571 - 2 516
Convertible bonds - US$ (2022) 2 524 - 2 609
Finance leases 1 321 1 362 1 339
9 028 8 722 9 461
Current 1 418 735 1 088
Non-current 7 610 7 987 8 373
Beginning of the period 9 461 9 279 9 279
Proceeds - - 6 278
Interest accrued 455 312 664
Interest repayments (334) (241) (533)
Capital repayments (341) (348) (4 593)
Conversion option on 2022 bonds - - (1 156)
Conversion option on 2018 bonds - - 8
Exchange adjustment (213) (280) (486)
End of the period 9 028 8 722 9 461
Committed facilities
South African banks 4 000 4 750 4 000
Foreign banks 421 467 445
4 421 5 217 4 445
All of the facilities remain undrawn. Of these facilities, R4.0 billion expires on 30 June 2021.
10. Cost of sales
Six months Six months
ended ended Period ended
31 December 31 December 30 June
2017 2016 2017
(Rm) (Reviewed) (Reviewed) (Audited)
On-mine operations 8 706 7 936 16 341
Processing operations 2 734 2 510 5 055
Refining and selling 741 677 1 378
Corporate costs 347 352 736
Share-based compensation 32 79 88
Chrome operation - cost of sales 64 105 186
Depreciation of operating assets 1 927 1 867 3 702
Metals purchased 4 896 5 598 10 030
Change in metal inventories (2 900) (501) (146)
16 547 18 623 37 370
11. Cash generated from operations
Six months Six months
ended ended Period ended
31 December 31 December 30 June
2017 2016 2017
(Rm) (Reviewed) (Reviewed) (Audited)
Profit/(loss) before tax 193 (238) (10 688)
Adjustments for:
Depreciation 1 927 1 867 3 702
Finance cost 535 385 811
Impairment 30 - 10 229
Other 234 (17) (283)
2 919 1 997 3 771
Cash movements from changes in
working capital:
Inventory (3 464) (1 240) (593)
Receivables/payables 296 (218) (129)
Cash generated from operations (249) 539 3 049
12. Headline earnings
Headline earnings attributable to equity holders of the Company arises from operations as follows:
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2017 2016 2017
(Rm) (Reviewed) (Reviewed) (Audited)
Profit/(loss) attributable to owners of
the Company (163) (371) (8 220)
Remeasurement adjustments:
- Profit on disposal of property,
plant and equipment (8) (15) (24)
- Impairment 30 - 10 229
- Insurance compensation - (175) (154)
- Total non-controlling interest effects
of adjustments (4) - -
- Total tax effects of adjustments (5) 53 (2 814)
Headline earnings (150) (508) (983)
Weighted average number of ordinary shares
in issue for basic earnings per share (million) 718.54 717.54 718.03
Weighted average number of ordinary shares
for diluted earnings per share (million) 721.30 720.69 721.78
Headline earnings per share (cents)
Basic (21) (71) (137)
Diluted (21) (71) (137)
13. Contingent liabilities and guarantees
As at the end of December 2017 the Group had contingent liabilities in respect of guarantees and other matters
arising in the ordinary course of business from which it is anticipated that no material liabilities will arise.
The Group has issued guarantees of R114 (December 2016: R122) (June 2017: R118) million. Guarantees of R1 396
(December 2016: R1 269) (June 2017: R1396) million have been issued by third parties and financial institutions
on behalf of the Group consisting mainly of guarantees to the Department of Mineral Resources for R1 277
(December 2016: R1 150) (June 2017:R1 277) million.
14. Related party transactions
- The Group entered into PGM purchase transactions of R1 831 (December 2016: R1 782) (June 2017: R3 745) million
with Two Rivers, an associate company, resulting in a payable of R1 041 (December 2016: R860) (June 2017: R1 034)
million. It received refining fees to the value of R17 (December 2016: R16) (June 2017: R32) million.
- The Group previously entered into sale and leaseback transactions with Friedshelf, an associate company. At the
end of the period, R1 206 (December 2016: R1 230) (June 2017: R1 215) million was outstanding in terms of the
lease liability. During the period, interest of R63 (December 2016: R63) (June 2017: R130) million was charged
and a R72 (December 2016: R66) (June 2017: R147) million repayment was made. The finance leases have an effective
interest rate of 10.2%.
- The Group entered into PGM purchase transactions of R 1 561 (December 2016: R1 386) (June 2017: R3 199) million
with Mimosa, a joint venture, resulting in a payable of R920 (December 2016: R725) (June 2017: R844) million.
It also received refining fees and interest of R150 (December 2016: R147) (June 2017: R317) million.
These transactions are entered into on an arm's-length basis at prevailing market rates.
- Key management compensation (fixed and variable) was R31 (December 2016: R44) (June 2017: R90) million.
15. Financial instruments
(Rm) Six months Six months
ended ended Year ended
31 December 31 December 30 June
2017 2016 2017
(Reviewed) (Reviewed) (Audited)
Financial assets - carrying amount
Loans and receivables 6 408 7 763 9 943
Financial instruments at fair value through
profit and loss2 - 907 -
Held-to-maturity financial assets 70 70 70
Available-for-sale financial assets1 192 174 179
6 670 8 914 10 192
Financial liabilities - carrying amount
Financial liabilities at amortised cost 14 815 13 556 14 832
Borrowings 9 028 8 722 9 461
Commitments 73 70 74
Trade payables 5 703 4 753 5 289
Other payables 11 11 8
Financial instruments at fair value
through profit and loss2 676 - 1 233
15 491 13 556 16 065
The carrying amount of financial assets and liabilities approximate their fair values.
1 Level 1 of the fair value hierarchy - Quoted prices in active markets for the same instrument
2 Level 2 of the fair value hierarchy - Significant inputs are based on observable market data with the rand-dollar
exchange rate of R12.38/US$ being the most significant. These instruments are valued on a discounted cash flow basis.
Impala Operations (ex-mine) key statistics
December December
2017 2016 Var %
Mining revenue (Rm) 6 685 7 078 (5.6)
Platinum 3 382 4 467 (24.3)
Palladium 1 747 1 396 25.1
Rhodium 784 356 120.2
Nickel 260 219 18.7
Other 512 640 (20.0)
Mining cost of sales (7 811) (8 362) 6.6
On-mine operations (6 268) (5 588) (12.2)
Processing operations (1 557) (1 435) (8.5)
Refining and selling operations (338) (304) (11.2)
Corporate costs (104) (100) (4.0)
Share-based payments (23) (68) 66.2
Depreciation (1 380) (1 219) (13.2)
Increase in metal inventories 1 859 352 428.1
Mining gross profit (1 126) (1 284) 12.3
Royalty expense (80) (179) 55.3
Profit from metal purchased transactions 221 (14) 1 678.6
Sale of metals purchased 10 100 10 842 (6.8)
Cost of metals purchased (9 881) (10 859) 9.0
Change in metal inventories 2 3 (33.3)
Gross margin ex-mine (%) (16.8) (18.1) 7.2
Sales volumes ex-mine
Platinum (000 oz) 266.2 318.7 (16.5)
Palladium 145.6 148.7 (2.1)
Rhodium 50.5 37.5 34.7
Nickel (tonnes) 1 879 1 651 13.8
Sales volumes metals purchased - IRS
Platinum (000 oz) 382.6 417.0 (8.2)
Palladium 265.6 284.6 (6.7)
Rhodium 49.7 56.2 (11.6)
Nickel (tonnes) 4 651 4 733 (1.7)
Prices achieved ex-mine
Platinum (US$/oz) 940 1 001 (6.1)
Palladium (US$/oz) 896 672 33.3
Rhodium 1 147 677 69.4
Nickel (US$/t) 10 308 9 244 11.5
Exchange rate achieved ex-mine (R/US$) 13.46 14.00 (3.86)
Production ex mine
Tonnes milled (000 t) 5 671 5 046 12.4
% UG2 milled (%) 58.2 60.0 (3.0)
Development metres (total) (metres) 50 681 43 227 17.2
Head grade (5PGE+Au) (g/t) 4.05 4.15 (2.4)
Platinum in concentrate (000 oz) 348.3 318.4 9.4
Platinum refined (000 oz) 271.9 318.7 (14.7)
Palladium refined 159.8 148.7 7.5
Rhodium refined 43.0 43.9 (2.1)
Nickel refined (000 t) 2 313 1 651 40.1
PGM refined production (000 oz) 539.8 612.5 (11.9)
Total cost (Rm) 8 267 7 427 (11.3)
(US$m) 617 529 (16.7)
per tonne milled* (R/t) 1 458 1 472 1.0
(US$/t) 109 105 (3.8)
per PGM ounce refined* (R/oz) 15 315 12 126 (26.3)
(US$/oz) 1 143 863 (32.4)
per platinum ounce refined* (R/oz) 30 405 23 304 (30.5)
(US$/oz) 2 269 1 659 (36.8)
net of revenue received for other metals* (R/oz) 18 257 15 111 (20.8)
(US$/oz) 1 363 1 076 (26.6)
Capital expenditure (Rm) 1 442 1 197 20.5
(US$m) 108 85 26.3
Labour including capital at period end (no) 41 914 41 383 (1.3)
Own employees 31 021 31 514 1.6
Contractors 10 893 9 869 (10.4)
Centares per panel man per month (m2/man) 22.0 20.2 8.9
Tonnes milled per employee costed** (t/man/annum) 275.25 252.68 8.93
* Excluding share-based compensation.
** Average working cost employees.
Zimplats key statistics
December December
2017 2016 Var %
Revenue (Rm) 3 834 3 352 14.4
Platinum 1 499 1 637 (8.4)
Palladium 1 379 994 38.7
Rhodium 231 110 110.0
Nickel 319 276 15.6
Other 406 335 21.2
Cost of sales (2 872) (2 889) 0.6
On-mine operations (1 482) (1 423) (4.1)
Processing operations (766) (751) (2.0)
Corporate costs (190) (200) 5.0
Share-based payments (7) (6) (16.7)
Treatment charges (31) (16)
Depreciation (451) (544) 17.1
Change in inventories 55 51 7.8
Gross profit/(loss) 962 463 107.8
Intercompany adjustment* (327) (65) (403.1)
Adjusted gross profit 635 398 59.5
Royalty expense (63) (55) (14.5)
Gross margin (%) 25.1 13.8 81.9
Sales volumes in matte
Platinum (000 oz) 132.8 136.2 (2.5)
Palladium 110.5 112.0 (1.3)
Rhodium 11.5 11.9 (3.4)
Nickel (t) 2 533 2 412 5.0
Prices achieved in matte
Platinum (US$/oz) 842 855 (1.5)
Palladium 931 632 47.3
Rhodium 1 495 659 126.9
Nickel (US$/t) 9 405 8 145 15.5
Exchange rate achieved (R/US$) 13.40 14.04 (4.6)
* The adjustment relates to sales by Zimplats to the Implats Group which were still in the pipeline at period end.
Production
Tonnes milled (000 t) 3 333 3 306 0.8
Head grade (5PGE+Au) (g/t) 3.49 3.48 0.3
Platinum in concentrate (000 oz) 139.7 138.6 0.8
Platinum in matte (000 oz) 136.2 137.1 (0.7)
Palladium in matte 112.8 112.2 0.5
Rhodium in matte 11.8 12.0 (1.7)
Nickel in matte (t) 2 172 2 433 (10.7)
PGM in matte (000 oz) 290.2 291.3 (0.4)
Total cost (Rm) 2 438 2 374 (2.7)
(US$/t) 182 169 (7.7)
per tonne milled** (R/t) 731 718 (1.8)
(US$/t) 55 51 (7.8)
per PGM ounce in matte** (R/oz) 8 401 8 150 (3.1)
(US$/oz) 627 580 (8.1)
per platinum ounce in matte** (R/oz) 17 900 17 316 (3.4)
(US$/oz) 1 336 1 233 (8.4)
net of revenue received for other metals** (R/oz) 756 4 807 84.3
(US$/oz) 56 342 83.5
Capital expenditure (Rm) 432 353 22.4
(US$m) 32.3 25.1 28.7
Labour including capital at period end (no) 5 997 5 887 (1.9)
Own employees 3 159 3 029 (4.3)
Contractors 2 838 2 858 0.7
Tonnes milled per employee costed*** (t/man/annum) 1 242.6 1 246.5 (0.3)
** Excluding share-based compensation.
*** Average working cost employees.
Marula key statistics
December December
2017 2016 Var %
Revenue (Rm) 1 242 971 27.9
Platinum 470 488 (3.7)
Palladium 530 356 48.9
Rhodium 172 76 126.3
Nickel 15 14 7.1
Other 55 37 48.6
Cost of sales (1 174) (1 144) (2.6)
On-mine operations (956) (925) (3.4)
Processing operations (122) (112) (8.9)
Share-based payments (2) (5) 60.0
Treatment charges (2) (2) -
Depreciation (92) (100) 8.0
Gross (loss) 68 (173) 139.3
Intercompany adjustment* 0 0
Adjusted gross loss 68 (173) 139.3
Royalty expense (36) (25) (44.0)
Gross margin (%) 5.5 (17.8) 130.9
Sales volumes in concentrate
Platinum (000 oz) 43.7 41.6 5.0
Palladium 44.9 42.5 5.6
Rhodium 9.1 8.7 4.6
Nickel (t) 130 133 (2.3)
Prices achieved in concentrate
Platinum (US$/oz) 799 837 (4.5)
Palladium 861 603 42.8
Rhodium 1 363 622 119.1
Nickel (US$/t) 8 587 7 726 11.1
Exchange rate achieved (R/US$) 13.62 13.97 (2.5)
* The adjustment relates to sales by Marula to the Implats Group which were still in the pipeline at period end.
Production
Tonnes milled (000 t) 941 909 3.5
Head grade (5PGE+Au) (g/t) 4.36 4.42 (1.5)
Platinum in concentrate (000 oz) 43.2 43.1 0.2
Palladium in concentrate 44.4 44.1 0.7
Rhodium in concentrate 9.0 8.9 1.1
Nickel in concentrate (t) 129 137 (5.8)
PGM in concentrate (000 oz) 113.3 112.7 0.5
Total cost (Rm) 1 078 1 037 (4.0)
(US$m) 80 74 (8.1)
per tonne milled** (R/t) 1 146 1 141 (0.4)
(US$/t) 86 81 (6.2)
per PGM ounce in concentrate** (R/oz) 9 515 9 201 (3.4)
(US$/oz) 710 655 (8.4)
per platinum ounce in concentrate** (R/oz) 24 954 24 060 (3.7)
(US$/oz) 1 862 1 713 (8.7)
net of revenue received for other metals** (R/oz) 7 083 12 854 44.9
(US$/oz) 529 915 42.2
Capital expenditure (Rm) 29 58 50.0
(US$m) 2.2 4.1 46.3
Labour including capital at period end (no) 3 998 4 738 15.6
Own employees 3 280 3 626 9.5
Contractors 718 1 112 35.4
Centares per panel man per month (m2/man) 23.4 26.1 (10.3)
Tonnes milled per employee costed*** (t/man/annum) 484.7 392.0 23.6
** Excluding share-based compensation.
*** Average working cost employees.
Mimosa key statistics
December December Var %
2017 2016
Revenue (Rm) 1 905 1 788 6.5
Platinum 731 805 (9.2)
Palladium 568 436 30.3
Rhodium 74 42 76.2
Nickel 258 240 7.5
Other 274 265 3.4
Cost of sales (1 593) (1 777) 10.4
On-mine operations (869) (936) 7.2
Processing operations (292) (300) 2.7
Corporate costs (87) (80) (8.8)
Treatment charges (143) (161) 11.2
Depreciation (233) (321) 27.4
Change in inventories 31 21 47.6
Gross profit 312 11 2 736.4
Royalty expense (53) (112) 52.7
Gross margin (%) 16.4 0.6 2 633.3
Profit for the six months (Rm) 156 124 25.8
50% attributable to Implats 78 62 25.8
Intercompany adjustment* (11) - -
Share of profit in Implats Group 67 62 8.1
Sales volumes in concentrate
Platinum (000 oz) 57.4 57.2 0.3
Palladium 45.7 46.1 (0.9)
Rhodium 4.7 4.6 2.2
Nickel (t) 1 674 1 572 6.5
Prices achieved in concentrate
Platinum (US$/oz) 949 1 002 (5.3)
Palladium 929 673 38.0
Rhodium 1 160 647 79.3
Nickel (US$/t) 11 489 10 870 5.7
Exchange rate achieved (R/US$) 13.40 14.04 (4.6)
* The adjustment relates to sales by Mimosa to the Implats Group which were still in the pipeline at period end.
Production
Tonnes milled (000 t) 1 407 1 366 2.9
Head grade (5PGE+Au) (g/t) 3.85 3.83 0.5
Platinum in concentrate (000 oz) 63.0 60.9 3.4
Palladium in concentrate 49.7 48.6 2.3
Rhodium in concentrate 5.5 5.2 5.8
Nickel in concentrate (t) 1 835 1 717 6.9
PGM in concentrate (000 oz) 133.7 129.8 3.0
Total cost (Rm) 1 248 1 316 5.2
(US$/t) 93 94 0.6
per tonne milled (R/t) 887 963 7.9
(US$/t) 66.2 68.6 3.5
per PGM ounce in concentrate (R/oz) 9 334 10 139 7.9
(US$/oz) 697 722 3.5
per platinum ounce in concentrate (R/oz) 19 810 21 609 8.3
(US$/oz) 1 479 1 539 3.9
net of revenue received for other metals (R/oz) 1 175 5 468 78.5
(US$/oz) 88 389 77.5
Capital expenditure (Rm) 263 248 6.0
(US$m) 19.6 17.7 10.7
Labour including capital (no)
Own employees 1 354 1 348 (0.5)
Two Rivers key statistics
December December
2017 2016 Var %
Revenue (Rm) 1 911 2 128 (10.2)
Platinum 864 1 089 (20.7)
Palladium 565 470 20.2
Rhodium 264 144 83.3
Nickel 41 40 2.5
Other 177 385 (54.0)
Cost of sales (1 386) (1 478) 6.2
On-mine operations (1 016) (960) (5.8)
Processing operations (209) (217) 3.7
Treatment charges (16) (16) -
Chrome costs (26) (117)
Depreciation (156) (132) (18.2)
Change in inventory 37 (36) 202.8
Gross profit 525 650 (19.2)
Royalty expense (46) (80) 42.5
Gross margin (%) 27.5 30.5 (9.8)
Profit for the six months (Rm) 336 402 (16.4)
46%/49%/45% attributable to Implats 155 197 (21.3)
Intercompany adjustment* (36) 20 (280.0)
Share of profit in Implats Group 119 217 (45.2)
Sales volumes in concentrate
Platinum (000 oz) 82.2 94.8 (13.3)
Palladium 48.6 55.9 (13.2)
Rhodium 14.4 16.6 (13.2)
Nickel (t) 294.4 318.1 (7.4)
Prices achieved in concentrate
Platinum (US$/oz) 784 822 (4.7)
Palladium 868 602 44.3
Rhodium 1 369 619 121.1
Nickel (US$/t) 10 456 9 041 15.7
Exchange rate achieved (R/US$) 13.41 13.97 (4.0)
* The adjustment relates to sales from Two Rivers to the Implats Group which at year end was still in the pipeline.
Production
Tonnes milled ex-mine (000 t) 1 713 1 747 (1.9)
Head grade (5PGE+Au) (g/t) 3.70 4.03 (8.2)
Platinum in concentrate (000 oz) 83.4 96.7 (13.8)
Palladium in concentrate 49.6 56.8 (12.7)
Rhodium in concentrate 14.7 17.0 (13.5)
Nickel in concentrate (t) 313 313 -
PGM in concentrate (000 oz) 178.7 207.1 (13.7)
Total cost (excluding Chrome) (Rm) 1 225 1 177 (4.1)
(US$/t) 91 84 (8.3)
per tonne milled (R/t) 715 674 (6.1)
(US$/t) 53 48 (10.4)
per PGM ounce in concentrate (R/oz) 6 855 5 683 (20.6)
(US$/oz) 512 405 (26.4)
per platinum ounce in concentrate (R/oz) 14 688 12 172 (20.7)
(US$/oz) 1 096 867 (26.4)
net of revenue received for other metals (R/oz) 2 446 2 637 7.2
(US$/oz) 183 188 2.8
Capital expenditure (Rm) 226 175 29.1
(US$m) 17 12 41.7
Labour including capital (no) 3 147 3 183 1.1
Own employees 2 405 2 414 0.4
Contractors 742 769 3.5
Note: These results have been equity accounted.
IRS key statistics
December December
2017 2016 Var %
Revenue (Rm) 10 657 10 916 (2.4)
Platinum 4 781 6 069 (21.2)
Palladium 3 221 2 618 23.0
Rhodium 727 512 42.0
Nickel 666 693 (3.9)
Other 1 262 1 024 23.2
Cost of sales (9 810) (10 187) 3.7
Metals purchased (9 840) (9 504) (3.5)
Processing operations (289) (212) (36.3)
Refining and selling operations (403) (373) (8.0)
Corporate costs (53) (52) (1.9)
Depreciation - -
Change in metal inventories 775 (46) 1 784.8
Gross profit 847 729 16.2
Metals purchased - adjustment on metal
prices and exchange (132) (158) 16.5
Inventory - adjustment on metal prices
and exchange 222 207 7.2
Gross profit in Implats Group 937 778 20.4
Metals purchased - fair value adjustment
on metal prices (296) 59 (601.7)
Metals purchased - foreign exchange adjustment 428 99 332.3
Gross margin (%) 7.9 6.7 17.9
Revenue (Rm) 10 657 10 916 (2.4)
Direct sales to customers 17 17 -
Sales to Impala 10 184 10 600 (3.9)
Toll income - external 423 281 50.5
Toll income - intercompany 33 18 83.3
Total sales volumes
Platinum (000 oz) 382.6 417.0 (8.2)
Palladium 265.6 284.6 (6.7)
Rhodium 49.7 56.2 (11.6)
Nickel (t) 4 771 4 853 (1.7)
Prices achieved
Platinum (US$/oz) 938 1 024 (8.4)
Palladium 910 648 40.4
Rhodium 1 091 639 70.7
Nickel (US$/t) 10 463 10 084 3.8
Exchange rate achieved (R/US$) 13.33 14.21 (6.2)
Refined production
Platinum (000 oz) 454.8 459.8 (1.1)
Palladium 246.1 319.8 (23.0)
Rhodium 55.8 47.5 17.5
Nickel (t) 5 594 6 632 (15.7)
PGM refined production (000 oz) 893.8 940.7 (5.0)
Metal returned
Platinum (000 oz) 115.7 0.0 -
Palladium 55.0 0.0 -
Rhodium 19.4 0.0 -
Nickel (t) 1 765 1 596 10.6
Contact details and administration
Registered office
2 Fricker Road
Illovo, 2196
Private Bag X18
Northlands, 2116
Telephone: +27 (11) 731 9000
Telefax: +27 (11) 731 9254
Email: investor@implats.co.za
Registration number: 1957/001979/06
Share codes:
JSE: IMP
ADRs: IMPUY
ISIN: ZAE000083648
ISIN: ZAE000247458
Website: http://www.implats.co.za
Impala Platinum Limited and
Impala Refining Services
Head office
2 Fricker Road
Illovo, 2196
Private Bag X18
Northlands, 2116
Telephone: +27 (11) 731 9000
Telefax: +27 (11) 731 9254
Impala Platinum (Rustenburg)
PO Box 5683
Rustenburg, 0300
Telephone: +27 (14) 569 0000
Telefax: +27 (14) 569 6548
Impala Platinum (Refineries)
PO Box 222
Springs,1560
Telephone: +27 (11) 360 3111
Telefax: +27 (11) 360 3680
Marula Platinum
2 Fricker Road
Illovo, 2196
Private Bag X18
Northlands, 2116
Telephone: +27 (11) 731 9000
Telefax: +27 (11) 731 9254
Zimplats
1st Floor
South Block
Borrowdale Office Park
Borrowdale Road
Harare, Zimbabwe
PO Box 6380
Harare
Zimbabwe
Telephone: +26 (34) 886 878/85/87
Fax: +26 (34) 886 876/7
Email: info@zimplats.com
Sponsor
Deutsche Securities (SA) Proprietary Limited
Impala Platinum Japan Limited
Uchisaiwaicho Daibiru, room number 702
3-3 Uchisaiwaicho
1-Chome, Chiyoda-ku
Tokyo
Japan
Telephone: +81 (3) 3504 0712
Telefax: +81 (3) 3508 9199
Company Secretary
Tebogo Llale
Email: tebogo.llale@implats.co.za
United Kingdom secretaries
St James's Corporate Services Limited
Suite 31, Second Floor
107 Cheapside
London
EC2V 6DN
United Kingdom
Telephone: +44 (020) 7796 8644
Telefax: +44 (020) 7796 8645
Email: phil.dexter@corpserv.co.uk
Public Officer
Ben Jager
Email: ben.jager@implats.co.za
Transfer secretaries
South Africa
Computershare Investor Services (Pty) Limited
Rosebank Towers
15 Biermann Avenue, Rosebank
PO Box 61051, Marshalltown, 2107
Telephone: +27 (11) 370 5000
Telefax: +27 (11) 688 5200
United Kingdom
Computershare Investor Services plc
The Pavilions
Bridgwater Road
Bristol
BS13 8AE
Auditors
PricewaterhouseCoopers Inc.
2 Eglin Road, Sunninghill
Johannesburg, 2157
Corporate relations
Johan Theron
Investor queries may be directed to:
Email: investor@implats.co.za
Johannesburg, 1 March 2018
www.implats.co.za
Date: 01/03/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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