Implats pays fat dividend, but strikes cautious tone on metal price outlook

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Implats' mine outside Rustenburg.
Implats' mine outside Rustenburg.
  • Implats shareholders benefitted from the strong gains in platinum and palladium prices, with its profit up 130% over the past year.
  • The company is paying out a final dividend of R12 per share, bringing the total dividend to R22. 
  • But Implats struck a cautious tone on the metals' price outlook.

Rallying metal prices and higher sales saw Impala Platinum's gross profit soar 130% to R53.5 billion in the 2021 financial year, with the company declaring a final dividend of R12 per share, bringing the total dividend for the year to R22.

The platinum price rallied to a six-year high of $1 267 (~R18 200) per ounce in February, before investor demand cooled.

Implats - which produces platinum, palladium and rhodium in Zimbabwe, South Africa and Canada - said tons milled from its operations increased by 19% to 23.21 million. This was due in part to the inclusion of the first full year of production from Impala Canada, which was acquired in December 2019.

Implats managed to hike output amid severe power supply constraints by Eskom, which resulted in "unprecedented levels of load shedding and curtailment calls".

In South Africa, the increase of the self-generation threshold by the government from 1 MW to 100 MW is seen as an opportunity by the company, and its Zimplats business in Zimbabwe was also exploring a large-scale solar power project to ensure security of supply.  

The group generated R38.3 billion in free cash flow - after capital investment of R6.3 billion at its managed operations - and ended the period with net cash after debt of R23.5 billion.

Chief executive Nico Muller stated said that the company's balance sheet was strong, and strong free cash flow generation enabled further debt reduction, so Implats is debt-free.

The company was cautious in its price outlook for platinum group minerals, particular for platinum - which could be affected by South African supplies coming onto the market and more subdued demand from car producers as they struggle with a semiconductor chip shortage. 

"In calendar 2021, a moderation in investment demand is likely to result in the platinum market returning to surplus. The supply impact of the release of in-process inventory by South African producers will be compounded by the demand impact of the global semi-conductor chip shortage on automotive production," Implats said.

In the case of palladium, reduced Russian supply should result in a "persistent but moderated deficit", while a more balanced market is expected for rhodium this year, before demand growth in 2022 is expected to result in a deficit. 

By midday on Thursday, Implats' share price was down almost 6%. Its share price is up 45% from a year ago. 

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