Cost containment and improved operational flexibility translate into stronger operating performance for RBPlat
- 8.4% reduction in lost time injury frequency rate
- 1.1% increase in production to 130 278 PGM ounces (4E)
- 5.8% increase in built-up head grade to 4.28g/t
- 1.3% increase in cash operating cost per platinum ounce to R11 756/Pt
- 103% increase in earnings per share to 87 cents (2012: 43 cents)
- R88 million surplus cash generated by operating activities after all capital expenditure
- R992 million cash position-balance sheet remains ungeared
Containing costs and increasing operational flexibility
Improving operational flexibility by increasing immediately stopable ore reserves (IMS) has been an on-going focus at Bafokeng Rasimone Platinum Mine and has enabled the normalisation of development rates, benefitting both grade and operating costs and has contributed to improved safety performance and labour efficiencies.
Improving IMS has also enabled a shift in strategic focus to cost management – covering a number of key areas including labour, contractors and high-cost consumables. This contributed to a below inflation increase of 2% in total operating costs and unit costs per 4E ounce. Working cost labour reduced by 11% from 6 744 to 5 984 and contributed to lower costs and improved efficiencies. Says Steve Phiri, RBPlat’s CEO, “Cost is a major concern. Industry-wide mines are deepening, grades declining and achieving sufficient development becoming more challenging. Cost containment remains a core management focus.”
Ounce output increased by 1.1% (130 278 ounces (4E) and 84 628 ounces platinum). Overall tonnes milled reduced by 3.8% due to a shortfall in sweepings and lower reef development rates. This was offset by a 5.8% increase in built-up head grade resulting from lower reef development dilution, no processing of low-grade surface stockpile and improved mining controls. A 4E built-up head grade of 4.28g/t was achieved.
Financial performance and development
The RBPlat Group’s balance sheet remains ungeared with cash and near-cash investments of R992 million. The company is well placed to fund Styldrift as a result of the working capital facilities for the Group increasing to R458 million and the Nedbank revolving credit facility being increased to R1 billion. The Styldrift I expansion project has advanced to 32.2% completion against a planned completion of 31.2% based on the revised project schedule resulting from the project optimisation study. The project remains on schedule and below budget. Total capital expenditure for the project to date amounted to R2.1 billion with total commitments of R2.8 billion.
Phase III of the BRPM Merensky replacement project involves the extension of North shaft’s Merensky decline from 11 level down to 15 level at the mine boundary. Project completion is forecast at two months ahead of schedule in 2017. Project expenditure to date stands at R489 million against a budget of R603 million.
Revenue increased by 18.6% to R1.5 billion, reflecting a rand basket price increase of 17% to R18 294 per platinum ounce in the first half of 2013. This was a result of the weakening of the rand against the US dollar. Total cash operating costs increased by only 2% to R988 million, mainly as a result of enhanced focus on cost containment combined with reduced milled tonnes. The 4E built-up head grade and consequent 4E ounces in concentrate had a positive impact on the cash operating cost per platinum ounce ending 1.3% higher at R11 756/Pt.
Gross profit margin improved by 68.0% to 21.0%, increasing earnings per share from 43 cents to 87 cents – a 103% increase. This was due to the 18.6% increase in net revenue offset by a 7% increase in cost of sales for the half year period.
Total capital expenditure reduced by R75 million (14.6%) to R446 million as a result of lower expenditure on stay-in-business and replacement projects, and higher expenditure on expansion projects and drilling (R61 million).
Full year production of approximately 2.3 million tonnes milled is anticipated with a UG2 contribution of up to 20%. Phiri says, “As the result of our robust strategy, the company is perfectly positioned to continue to strengthen its performance.”
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