Implats to invest R10 billion in Limpopo and Zimbabwe mines

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Impala Platinum Two Rivers Mine
Impala Platinum Two Rivers Mine
  • Impala Platinum plans to invest R10 billion in the expansion of its existing projects to bolster output.
  • It will spend R5.7 billion on Two Rivers mine in Limpopo and another around R4.3 billion in Zimplats, its Zimbabwe operations.
  • CEO Nico Muller said the producer, like its peers, has been buoyed by higher commodity prices and a favourable exchange rate.

Impala Platinum has declared a record interim dividend and plans to invest R10 billion in the expansion of its existing projects to bolster output - with a focus on shallow and mechanised operations.

The platinum producer - which also has operations in Zimbabwe and Canada - said on Thursday it will spend R5.7 billion on its Two Rivers mine in Limpopo and another $290 million (around R4.3 billion) on Zimplats, its Zimbabwe operations.

The expansion of the Two Rivers mine, which is a a joint venture between African Rainbow Minerals and Implats, is expected to take place over the next four to five years, and the Zimbabwe mine investment will involve the expansion of its two biggest shaft, as well as a new concentrator plant for $70 million.

CEO Nico Muller said the producer, like its peers, has been buoyed by higher commodity prices and a favourable exchange rate. It is also eying other growth projects, including organic opportunities and brownfield projects, where it stands greater value prospects.

"When it comes to external opportunities, we reiterate that we will be prioritising mechanised, shallow and lower-risk opportunities," said Muller.

He pointed to Implats' 15% interest in the Waterberg project, adding that it is opportunities similar to that business which the company will favour.

"It is highly unlikely that the company will get into another deep-level conventional prospect."

Mining companies have enjoyed the up-cycle in commodity prices with a growing number unveiling growth projects and paying out dividends.

Revenue increased

Implats' revenue for the six months to end of December increased by 107% to R58.12 billion, while headline earnings reached R14.4 billion, after gaining 328% compared to the corresponding period. The improved earning allowed the group to generate a gross profit of R22.37 billion, compared to R6.17 billion in the first half of 2020.

This left a free cash flow of R20.1 billion, up 304%.

Muller said the record free cashflow allowed Impala to make a "series of debt repayments and targeted transactions to strengthen financial flexibility" and secure sustainable shareholder returns.

The group's R10 interim dividend was double the amount declared in the previous full financial year. 

The company forced in May to temporarily shut down its Marula operation after a discovery of a "cluster" of Covid-19 infections

"The factors driving current and future PGM [platinum group metals] demand and the characteristics of the economic impact of the pandemic continue to support our view that, ultimately, the impact of Covid-19 will be cyclical rather than structural in nature."

It forecast  a strong rebound in both the demand and supply of platinum group metals in 2021, with a short-term deficits in palladium and rhodium to be moderated by the anticipated release of in-process concentrate inventory accumulated in 2020.

Various producers have reported a strong performance in palladium and rhodium and their demand is largely driven by the global automotive sector, where the metals are used in catalytic converters to reduce exhaust gas emissions.

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