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    RBPlat survives another tough year with cash on its balance sheet

    01 March 2016
    • Operational stability remains a major pillar of our strategy
    • Safety improvements marred by five fatalities
    • R918 million cash on hand
    • R619 million cash generated by operations
    • Decisive board response to deal with changing market conditions
    • Water treatment plant commissioned
    It is with deep regret that we announce five fatal accidents at our operations in FY2015. Our sincere condolences go to the families, friends and colleagues of the deceased.This tragic loss of life marred our otherwise promising safety achievements with our lost time injury frequency rate(LTIFR) and serious injury frequency rate (SIFR) having improved by 23% and 54  % year-on-year and 59% and 75% over the past six years respectively.

    The safety of our employees remains paramount and we therefore commissioned independent investigations to undertake a full review of our safety performance. We have since revised our safety management strategy and we have introduced additional safety measures in our quest for zero harm. The safety, health and well-being of our employees will continue to be a major focus at our operations in FY2016.

    The FY2015 financial year was a challenging one for the industry and for ourselves. The reduced demand for PGMs; an average US$ platinum price that was 28% lower than the previous year; lower throughput due to safety stoppages and power constraints; and lower grades contributed to annual revenue of R3 044.7 million, 19% lower than in FY2014.

    Lower revenue, together with a 7.6% increase in the cost of sales ,(costs of sales excluding derpreciation and amortisation ) resulted in a significant reduction in EBIDTA  margin  to 9.8%.

    RBPlat made a headline loss of 83 cents per share in the period under review, compared to headline earnings of 239 cents per share the previous year. This negative movement can be attributed to several factors including the 13% reduction in the average rand basket price of R17 256/Pt ounce, an increase in cash costs and the settlement of a tax dispute with SARS.

    Cash operating costs increased 16% year-on-year to an average cost per platinum ounce of R14 504. Despite grade and throughput challenges, the full year cash operating cost of R14 504 represented a 7% improvement on our cash operating cash unit cost for the first half of the year.

     
    Cash operating costs increased 16% year-on-year to an average cost per platinum ounce of R14 504. Despite grade and throughput challenges, the full year cash operating cost of R14 504 represented a 7% improvement on our cash operating cash unit cost for the first half of the year.

    Our Styldrift I project was successfully commissioned in FY2015. In August 2015 the depressed PGM market required the board to implement a strategic decision. Construction  activities, and the associated capital expenditure, were scaled back in order to preserve cash and protect our balance sheet. A number of other non-critical projects and operations were deferred or suspended due to prevailing market conditions, including the 250ktpm upgrade of the Bafokeng Rasimone Platinum Mine (BRPM) concentrator.

    In turn, we focused increasingly on mining and processing the Merensky Reef at BRPM.

    Tonnes delivered decreased by 1% to 2 456kt (FY2014: 2 471kt), while Merensky tonnes reduced by 2% to 1 872kt and UG2 tonnes increased by 4% to 585kt compared to the previous year. The reduction in Merensky tonnes is directly attributable to the increase in safety-related stoppages.

    Total tonnes milled reduced by 1% to 2 461kt with Merensky tonnes reducing by 2% to 1 874kt. UG2 tonnes increased by 4% to 587kt.

    Development also reduced year-on-year by 11% to 35.5km.

    The relationship with our labour force has continued to be solid and is characterised by our efforts to base this partnership on trust, respect, transparency and fairness. Our employee home ownership scheme is a good example of RBPlat’s commitment to our people and 417 employees purchased homes in Phase 1 of the scheme.  The land for Phase 2 has been secured and work has commenced.

    We also value our communities and are proud of our Social and Labour Plan (SLP) initiatives. We have invested R487.9 million in the community since we took control of the BRPM JV in 2010. Our SLP commitments in 2016 will mainly address human resource development and education, particularly learning support for maths and science.

    Conclusion and outlook

    Our key challenges in the current year are a return to FY2014 productivity levels by ensuring operational stability, volume delivery and grade optimisation. We also need to maximise cash flow by containing costs. In addition to achieving operational excellence we need to ensure zero fatalities as well as to maintain our safety improvments.  
     
    “We have had a tough year but we can take some comfort from our achievements. We do not forsee PGM prices improving for at least another 12 months and this means that we must continue to be prudent in our approach, but at the same time we need to maintain our flexibility so that we are well positioned to take advantage of an upturn in the market. I would like to close by thanking  our employees , shareholders  and all other stakeholders for standing by us. We have a great deal still to achieve, and we need your continued support,” said Steve Phiri, RBPlat CEO.