IMPALA PLATINUM HOLDINGS LIMITED - Third quarter production report for the period 1 January to 31 March 2018
26 April 2018 7:05
IMP 201804260003A
Third quarter production report for the period 1 January to 31 March 2018
IMPALA PLATINUM HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1957/001979/06)
JSE Share code: IMP
ADR code: IMPUY
ISIN: ZAE000083648
(“Implats” or “the Group”)
Third quarter production report for the period 1 January to 31 March 2018
Implats’ Chief Executive Officer, Nico Muller, commented: “Group tonnes milled improved by 17%
this quarter against the prior comparable period, and by 10% for the nine-month period ended 31
March 2018. Following operational issues affecting the smelter at Impala Rustenburg, which
resulted in lower refined volumes and the stockpiling of metal in concentrate, all Group furnaces
are now operational and making steady progress in processing the inventory build-up. Impala
Rustenburg and Marula have delivered encouraging results over the last quarter. Steps
implemented at the operations to improve production and cost performance are starting to deliver
positive results. However, the elimination of high-cost production at Impala Rustenburg remains
our key imperative and I am happy to report that good progress is being made with this operation’s
strategic review to align the business with our lower future metal prices outlook. The Zimplats,
Mimosa Two Rivers and Impala Refining Services (“IRS”) again delivered outstanding
performances during the period under review.”
Unaudited Unaudited Unaudited Unaudited
Operational information Quarter ended Quarter ended Nine months Nine months
31 March 2018 31 March 2017 31 March 2018 31 March 2017
Gross Production
Tonnes milled 000t 4 593 3 939 14 537 13 201
Grade (6E) g/t 3.87 3.75 3.88 3.88
Platinum in concentrate (mine-to-market) 000oz 309 290 987 948
Platinum in concentrate 000oz 37 50 227 159
(third-party and toll)
Platinum refined 000oz 316 331 1 042 1 110
Impala: platinum refined 000oz 71 160 342 479
IRS: platinum refined 000oz 245 171 700 631
Palladium refined 000oz 196 207 602 676
Rhodium refined 000oz 43 48 142 139
Nickel refined 000t 3 724 4 332 11 631 12 614
Unaudited Unaudited Unaudited Unaudited
Operational information Quarter ended Quarter ended Nine months Nine months
31 March 2018 31 March 2017 31 March 2018 31 March 2017
Managed operations production:
Impala
Tonnes milled 000t 2 493 2 151 8 163 7 198
Grade (6E) g/t 4.11 3.95 4.06 4.09
Platinum in concentrate 000oz 151 143 499 461
Refined platinum production 000oz 71 160 342 479
Marula
Tonnes milled 000t 441 221 1 382 1 131
Grade (6E) g/t 4.12 3.69 4.28 4.28
Platinum in concentrate 000oz 20 9 63 52
Zimplats
Tonnes milled 000t 1 659 1 567 4 992 4 872
Grade (6E) g/t 3.48 3.49 3.48 3.49
Platinum in concentrate 000oz 69 65 208 204
Platinum in matte 000oz 69 66 205 203
JV operations production:
Mimosa
Tonnes milled 000t 675 670 2 081 2 036
Grade (6E) g/t 3.82 3.85 3.84 3.84
Platinum in concentrate 000oz 30 30 93 91
Two Rivers
Tonnes milled 000t 878 868 2 592 2 615
Grade (6E) g/t 3.56 3.78 3.65 3.95
Platinum in concentrate 000oz 40 43 123 140
Group and third-party production
Platinum refined 000oz 245 171 700 631
Mine-to-market platinum refined 000oz 179 168 468 478
Third-party and toll platinum refined 000oz 67 3 232 152
SAFETY
Implats’ safety strategy remains firmly centred on inculcating a zero harm safe production culture.
This transformational journey to realise and sustain safe production across all operations is
supported by various initiatives targeting effective leadership and unwavering compliance by all to
our safe production practices. While many individual business units have made significant
progress, and continue to deliver exceptional safety performances, Impala Rustenburg remains a
key focus area.
Regrettably, during the quarter ended 31 March 2018, Impala Rustenburg recorded a winch
related fatal injury. Mr Kelebone Molikoe passed away at 10 Shaft on the 19 January 2018 after
having been struck by a return-rig snatch block. The Implats board and management team extend
their sincere condolences to the family, friends and colleagues of Mr Molikoe.
PRODUCTION
Tonnes milled across the Group during the quarter ended 31 March 2018 increased by 17% to
4 593 000 tonnes, compared to 3 939 000 tonnes in the prior corresponding period. This increase
was largely as a result of a much stronger mining performance at Impala Rustenburg and Marula,
supported by sustained excellent mining contributions from all other operations.
In addition to the significantly increased mining volumes from Impala (16%) and Marula (100%),
both operations also improved mill grades, which increased by 4% and 12% respectively. This
increase in mill grade more than compensated for a planned lower mill grade from the Two Rivers
operation, which decreased by 6% period-on-period as a result of ongoing split-reef mining. As a
result, the mill grade across all the mining operations (managed and joint venture) increased by
3% to 3.87g/t (6E) during the quarter ended 31 March 2018.
Consequently, platinum in concentrate produced during the quarter across all the mining
operations increased by 7% to 309 000 ounces, compared to 290 000 ounces in the prior
corresponding period. Over the nine-month period ended 31 March 2018, the combined tonnes
milled for all operations increased by 10% to 14 537 000 tonnes. The average mill grade was
unchanged at 3.88g/t (6E) and platinum in concentrate increased by 4% to 987 000 ounces,
compared to 948 000 ounces produced in the prior corresponding period.
Platinum in concentrate received during the quarter ended 31 March 2018 from IRS third-party
and toll customers decreased by 26% to 37 000 ounces, but for the nine-month period ended 31
March 2018 there was an increase of 43% to 227 000 ounces.
Notwithstanding a much-improved operational performance, refined platinum production during
the quarter decreased by 5% to 316 000 ounces, compared to 331 000 ounces in the prior period.
This was a direct consequence of a temporary pipeline stock build-up at the Impala smelting
operation due to an electrical failure at the Number 5 furnace in February 2018.
Over the nine-month period ended 31 March 2018, refined platinum production was similarly
impacted by furnace maintenance work commissioned during the first half of the financial year,
which was further impacted by the electrical failure experienced during February 2018.
Consequently, Group refined platinum production during the period decreased by 6% to 1 042 000
ounces, compared to 1 110 000 ounces during the prior corresponding period. The temporary
build-up in accumulated pipeline stocks over the nine-month period amounted to 153 000 ounces
at 31 March 2018.
Furnace 5 was successfully recommissioned during April 2018 and is expected to be back at full
production from May 2018. Despite having all three furnaces back in operation during the fourth
quarter of the financial year, it is now estimated that some 100 000 platinum ounces of
accumulated pipeline stocks will not be refined within the current financial year. In an effort to
moderate the negative cash flow impact, management has sold forward some accumulated stock
during January 2018 and will consider further mitigating measures on an ongoing basis.
Impala Rustenburg
Impala Rustenburg delivered an improved operational performance compared to the previous
corresponding period, which was negatively impacted by the 14 Shaft decline fire and 1 Shaft fall-
of-ground incident.
Tonnes milled during the quarter ended 31 March 2018 increased by 16% to 2 493 000 tonnes,
compared to 2 151 000 tonnes in the previous comparable period. The mill grade, which remains
impacted by ongoing rehabilitation work at 16 Shaft’s ore-pass system, nonetheless improved by
4% to 4.11g/t (6E).
Notwithstanding an aggregate 20% improvement in core mining performance (16% tonnes and
4% mill grade) during the quarter under review, platinum produced in concentrate only increased
by 6% to 151 000 ounces, compared to 143 000 ounces in the previous corresponding period.
This is largely because 15 000 ounces were produced from non-mining activities during the
previous comparable period (smelter reverts and other materials).
Over the nine-month period ended 31 March 2018, tonnes milled increased by 14% to 8 163 000
tonnes. The mill grade decreased by 1% to 4.06g/t (6E) and platinum produced in concentrate
increased by 8% to 499 000 ounces, compared to 461 000 ounces in the prior corresponding
period.
Although there was an improvement in fundamental mining performance, refined platinum
production during the quarter ended 31 March 2018 decreased by 56% to 71 000 ounces from
160 000 ounces in the prior period. This was as a consequence of a temporary concentrate stock
build-up during the period as a result of an electrical failure at the Number 5 furnace.
Over the nine-month period ended 31 March 2018, refined platinum production was similarly
impacted by furnace maintenance work commissioned during the first half of the financial year,
which was further impacted by the electrical failure experienced during February 2018.
Consequently, refined platinum production during the period under review decreased by 29% to
342 000 ounces, compared to 479 000 ounces in the prior corresponding period. The temporary
build-up in accumulated pipeline stocks over the nine-month reporting period amounted to 153 000
ounces at 31 March 2018.
All three transformers at the Number 5 furnace were successfully replaced during the quarter
ended 31 March 2018 and the furnace was safely recommissioned during April 2018. It is now
estimated that, although the furnace will be back at full production during May 2018, some 100 000
platinum ounces of pipeline stocks accumulated before the April 2018 recommissioning will not be
refined within the current financial year.
As a result, the full-year refined platinum guidance for Impala Rustenburg is revised to
approximately 560 000 ounces platinum.
Zimplats
Zimplats delivered a pleasing operational performance during the period under review. Tonnes
milled increased by 6% during the quarter to 1 659 000 tonnes, compared to 1 567 000 tonnes in
the prior corresponding period. The mill grade was largely maintained during the period at 3.48g/t
(6E), which resulted in platinum produced in concentrate increasing by 5% to 69 000 ounces,
compared to 65 000 ounces in the prior corresponding period.
Mill throughput over the nine-month period ended 31 March 2018 increased by 2% to 4 992 000
tonnes, compared to 4 872 000 tonnes in the prior corresponding period. Platinum produced in
concentrate during this period similarly improved by 2% to 208 000 ounces from 204 000 ounces
in the previous comparable period.
The full-year production guidance for the operation is maintained at 255 000 to 265 000 ounces
platinum in concentrate but is expected to be near the top end of the guided range.
Marula
Marula delivered a strong operational turnaround following a restructuring process implemented
at the end of the 2017 financial year. The period under review saw a notable decline in community
disruptions compared to the prior comparable period, which was significantly impacted by protest
action. As a consequence, tonnes milled during the quarter ended 31 March 2018 were almost
double compared to the previous corresponding period, increasing to 441 000 tonnes from
221 000 tonnes. The mill grade improved by 12% during the quarter to 4.12g/t (6E), which resulted
in platinum produced in concentrate increasing by 122% to 20 000 ounces, compared to 9 000
ounces in the prior period.
Mill throughput over the nine-month period ended 31 March 2018 increased by 22% to 1 382 000
tonnes, compared to 1 131 000 tonnes in the corresponding period. Platinum produced in
concentrate improved by 21% to 63 000 ounces, compared to 52 000 ounces in the prior period.
The full-year production guidance for the operation is maintained at 80 000 to 90 000 ounces
platinum in concentrate.
Mimosa
Mimosa delivered another good performance during the period under review. Tonnes milled
during the period improved by 1% to 675 000 tonnes, while the mill grade reduced by 1% to 3.82g/t
(6E) and platinum produced in concentrate remained unchanged at 30 000 ounces.
Mill throughput over the nine-month period ended 31 March 2018 increased by 2% to 2 081 000
tonnes, compared to 2 036 000 tonnes in the prior period. Platinum produced in concentrate
similarly improved by 2% to 93 000 ounces, compared to 91 000 ounces in the prior period.
The full-year production guidance for the operation is maintained at 115 000 to 120 000 ounces
platinum in concentrate.
Two Rivers
Operational performance at Two Rivers was impacted by continued lower-grade split-reef mining
during the period under review. Tonnes milled during the quarter increased by 1% to 878 000
tonnes, compared to 868 000 tonnes in the prior comparable period. However, mill grade was
significantly impacted and decreased by 6% to 3.56g/t (6E). This, in turn, resulted in platinum
produced in concentrate declining by 7% to 40 000 ounces, compared to 43 000 ounces in the
prior corresponding period.
Mill throughput over the nine-month period ended 31 March 2018 decreased by 1% to 2 592 000
tonnes, while the mill grade during the period decreased by 8% to 3.65g/t (6E). Consequently,
platinum produced in concentrate during the period decreased by 12% to 123 000 ounces, from
140 000 ounces in the prior comparable period.
The full-year production guidance for the operation is maintained at 165 000 to 175 000 ounces
platinum in concentrate, and is expected to be at the lower end of the guided range.
IRS
Platinum in concentrate received during the quarter from IRS third-party and toll customers
decreased by 26% to 37 000 ounces, which was in line with planned lower deliveries over the
Christmas period. Notwithstanding, receipts for the nine-month period ended 31 March 2018
increased by 43% to 227 000 ounces.
Refined platinum production for the quarter was 43% higher than the previous period at 245 000
ounces. Over the nine-month period ended 31 March 2018, refined platinum production increased
by 11% to 700 000 ounces, compared to 631 000 ounces in the prior corresponding period. This
was largely as a result of increased toll refining receipts during the period.
The full-year production guidance for the operation is maintained at 250 000 to 260 000 ounces
platinum receipts in concentrate from third party customers, and is expected to be near the top
end of the guided range.
OUTLOOK
While Implats’ operational performance has shown good improvement over the nine-month period
ended 31 March 2018, furnace challenges experienced during the period will unfortunately inhibit
all the platinum produced in concentrate during the period from being fully refined before the
financial year-end. Consequently, refined platinum guidance for the Group is revised to 1 460 000
ounces from 1 500 000 ounces previously guided, with accumulated above normal pipeline stocks
projected to be some 100 000 ounces platinum at the end of the current financial year.
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
R4.6 to R4.8 billion for the current financial year.
The third quarter production report for the period 1 January to 31 March 2018 has not been
reviewed and reported on by the external auditors of Implats.
Queries:
Johan Theron Alice Lourens
Group Executive: Corporate Relations Group Corporate Relations Manager
E-mail: Johan.Theron@implats.co.za E-mail: Alice.Lourens@implats.co.za
Tel: +27 11 731 9013/43 Tel: +27 11 731 9033/43
Cell: +27 82 809 0166 Cell: +27 82 498 3608
26 April 2018
Johannesburg
Sponsor to Implats
Deutsche Securities (SA) Proprietary Limited
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