Increase in tonnes milled and labour efficiencies keep RBPlat on steady course during tough and challenging year
Although 2012 was challenging across the industry, key features include the following:
- Improvement in injury frequency rates, the result of ongoing development of a resilient safety culture;
- A 3% uptick in milled tonnages to 2.375Mt;
- At Styldrift I, the successful intersection of the Merensky Reef 600m below surface a month ahead of schedule, and below budget;
- Increase in immediately stopable reserve face length from 4.58km to 5.71km and an increase in panel ratio to 1.48;
- BRPM Phase II replacement project completed on schedule and under budget by R110m;
- Increase in unit cash operating cost contained to 10.4% at R864/tonne milled;
- Capex increases held to 2.4%, while replacement projects continue;
- Headline earnings decline to 104 cents;
- EBITDA as a percentage of revenue decreased to 22.1% (2011: 34.8%) mainly due to reduced sales volumes and an increase in cash operating costs;
- Net revenue decreased by 3.7% due to lower volumes produced (4.4%) and only a marginal (0.7%) increase in the rand basket price to R16 404 per platinum ounce (2011: R16 282); and
- Gross profit margin declined by 37.4% to 11.9% (2011: 19%) due to 3.7% decrease in net revenue and 10.4% increase in cash operating cost per tonne milled.
RBPlat Chief Executive Officer, Steve Phiri said that 2012 had been both a tough and a rewarding year. “We deeply regret the loss of life at BRPM at the beginning of 2012,” he said. “However, we remain firmly committed to a policy of zero harm and we are continually liaising with the relevant stakeholders to improve our safety performance. Our safety strategy is aimed at developing a resilient culture of safety and by removing employees from hazardous situations. The 26% reduction in LTIFR and 10% reduction in the serious injury frequency rate do, I believe, demonstrate the success of our safety programme.”
Safety stoppages, although having increased by 28%, show a high correlation with injuries or factors directly contributing to injuries compared to previous years. These translated to production losses of 117kt.
“Aside from the global woes, at home the industry was plagued in the second half of the year by industrial unrest – and with serious consequences at some operations,” continued Phiri. “Fortunately for us, the impact at RBPlat was modest as compared to the rest of the industry – with production losses of 70kt – and we believe this is mainly due to our policy of open engagement and, assisted by other parties, a peaceful resolution of the workforce’s grievances. Overall, employee productivity improved slightly, by 2% to 30t per employee, and we have designed our incentive scheme to promote productivity in the longer term.”
The built up head grade declined by 6.4% from 4.35/t (4E) to 4.07/t (4E) given our increased exposure to UG2, and its associated lower grades. In general, the grades achieved were in line with expectations and where they were lower, can be attributed to difficult mining conditions caused by rolling reef, narrow reef width and a high reef development to stoping ratio. Merensky tonnes milled (safety stoppages and industrial unrest) was offset by a 61% increase in UG2 production, and the treatment of some 60kt of low-grade surface stockpile.
Of the 2.375Mt milled, 2.21Mt were treated at the BRPM concentrator and 160kt at Waterval. At BRPM, UG2 volumes treated increased from 116kt to 257kt, a significant increase in contribution to 11.59%. The increase in UG2 volumes was facilitated by the installation of a blending facility in the latter part of 2012. Overall, concentrator recoveries were lower by 0.9% to 86.71% due to the reduction in head grade, the increased UG2 contribution and a 35% punitive recovery apportionment at Waterval in Q1 when the delivered grade dropped below that stipulated in our contract with Anglo American Platinum. This resulted in a net 4.4% reduction in 4E ounce output to 269koz.
Operating costs were impacted by mining inflation of above the CPIX of 5.6%, and although we reduced operating labour by 8% over the previous year in line with our business optimisation strategy, labour represents a significant portion of our operating costs at 62% (materials and mining 30%; utilities 8%).
According to Phiri, cost management will be a key success driver in 2013. “We will be reviewing our capital expenditure and reducing it where possible, provided it does not place business sustainability at risk,” he said. “Cost management will be a major focus and we will need to improve efficiencies and control workforce numbers. There is no doubt that we are facing a number of challenges. But there are positives as well. Styldrift I remains on schedule and we expect to begin production in 2015, ramped up to full production within three years. At BRPM we have significantly improved our operational platform by the increase in stopable reserve face length, among other things, and we will leverage this strength through our on-going high focus on stakeholder engagement, particularly with regard to operational disruptions.”
Phiri is confident that the company’s strategic goals remain relevant, and that production levels and head grade can be maintained in line with forecasts. “Some of our projects have been put on hold due to our decision to defer certain capital expenditure,” he said. “However, our BRPM replacement projects, the North shaft chairlift project and the Styldrift I expansion project are all progressing steadily and we have commenced a feasibility study for a stand-alone concentrator plant adjacent to Styldrift.
“And there are other less tangible but equally important positive elements to celebrate. Our ranking in the Carbon Disclosure Project improved from 71 in 2011 to 22 in 2012; RBPlat was included in the JSE SRI Index and Nedbank Green Index in 2012 for the first time, and we also handed over a R24m investment in world class sports fields at five schools in neighbouring communities. The sustainability of our business is as important to us as producing safe platinum ounces. We have laid the groundwork in our communities for a school development programme with long-term goals. Due to commence in 2013, we look forward to seeing the results of the planned in-class interventions, the upgrades to facilities and equipment, and raising the overall education standards, but particularly in the disciplines of maths and science.”For further enquiries, please contact:
Royal Bafokeng Platinum Limited
Investor Relations Manager
Tel: +27 (0)10 590 4517
Mobile: +27 (0)82 920 7803
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