Press releases

RBPlat reports 'satisfactory' performance for six months

Key features of the half-year are:

  • One million fatality-free shifts achieved by June - safety remains a key focus
  • Conclusion of three-year wage agreement
  • Production steady ,142 100 ounces of PGMs (4E) despite challenging environment
  • Concentrator recoveries improve by 1.6% to 87.27%
  • BRPM revenue up by 3% to R1.5 billion
  • Unit cash operating cost rises by 14.8% (9% on normalised basis)
  • Settlement of inter-company balances results in R325.8 million cash inflow to BRPM
  • Earnings per share of 105 cents (2010: 132 cents)
  • Balance sheet ungeared, with healthy cash and near-cash position of R1.29 billion
  • Accelerated capital expenditure at BRPM of R592 million for the first half of 2011 (2010: R362 million)
  • R233.4 million declared savings on Styldrift I Project to date

RBPlat CEO Steve Phiri notes that: “2011 is a year of consolidation for RBPlat, with the further embedding of the achievements since taking operational control from Anglo American Platinum in January 2010. Given the challenging first half of the year, production for the full year is expected to remain at levels similar to those achieved in 2010.

“Our decision to start with the co-extraction of UG2 is showing results and continues to provide flexibility, although we expect our Merensky bias to continue at between 85-90% of total production”.

“Operating costs remain a key challenge and are expected to increase at a higher rate than inflation owing to higher input costs, as well as increased wages with effect from 1 July.

“I particularly want to congratulate our employees, our unions and our managers on their excellent performance in respect of safety and, in particular the achievement of one million fatality-free shifts in June.

“RBPlat continues to enjoy a healthy financial position with the strong cash-generative Boschkoppie anticipated to fund at least 50% of the Styldrift project.

“We remain optimistic about the outlook for the PGM markets in the medium-long term, taking into account the forecasted growth in demand on one side and the supply constraints which continue to face the industry on the other side.”

Safety

In its continuous drive towards zero harm, RBPlat achieved a further reduction of 4% in its Lost Time Injury Frequency Rate (LTIFR) from 1.15 to 1.10 lost time injuries per 200,000 hours worked. In addition, the Serious Injury Frequency Rate (SIFR) improved by 32%. This improvement in safety performance is attributed to a new safety strategy that focuses on leadership, design, systems and behaviour, specifically in areas associated with high-severity injuries.

Conclusion of wage agreement

A landmark three-year wage agreement has been concluded with the National Union of Mineworkers. Basic pay increases are structured on a sliding scale basis over the three-year period with operational bargaining unit employees receiving 10%, 8% and 9 % respectively while employees represented by the supervisory bargaining unit will receive 8%, 7 % and 7% respectively, Where the Consumer Price Index (CPI) reaches 7% by March of the increase year, the supervisory bargaining unit employees will receive CPI plus 1%.

The agreement, which includes the principle that some aspects of remuneration are linked to agreed performance and efficiency targets, is unique in the platinum industry, providing the business and partners with stability and an aligned growth focus for the future.

Operational performance

Despite a challenging environment, particularly in the first quarter, production of PGMs in concentrate remained steady at 142,100 4E ounces compared with 141,200 4E ounces in the first half of 2010. This was achieved through additional direct mining resources, working additional shifts, an increase in UG2 output and improved concentrator plant recoveries.

The total reef tonnage milled at 1,172,000 tonnes was down slightly from the first six months of 2010, mainly as a result of Merensky output reducing by 11%, which was largely offset by an increase in UG2 production. Factors contributing to the reduced Merensky output were safety- related stoppages, a conveyor belt failure at the North shaft and lower immediately minable reserve face length (IMS). Appropriate measures to increase IMS have been initiated.

The overall mill head grade was 4.32g/t4E compared with 4.34g/t4E in the previous year. The Merensky grade improved from 4.34g/t4E to 4.41g/t4E but the overall grade was diluted by an increased contribution from UG2 production at a lower grade of 3.65g/t4E. UG2 production is expected to contribute around 15% of total volumes for the remainder of 2011.

The marginally lower milled tonnage and grade was offset by a 1.6% improvement in concentrator plant recovery, from 85.89% to 87.27% as a result of more efficient plant operation and the impact of the ISA mill.

The additional effort invested in maintaining total output during the difficult first half of 2011 is reflected in operating costs. Cash cost per tonne increased by 14.8% to R765 per tonne and cash cost per platinum ounce by 14.2% to R9,732 per platinum ounce. On the normalised basis, after excluding the non-recurring optimisation project cost, the above normal safety stoppages and the impact of the conveyer belt failure at the North shaft, the normalised cash cost per tonne is R726.59, a 9% increase compared to the same period for 2010. Key contributing factors were increased direct mining labour costs, overtime allowances for working on public holidays and the non-recurring costs associated with a business optimisation project which amounted to R25.2 million for the first six months of 2011.

Capital expenditure

Total capital expenditure increased to R592 million, mainly attributable to an increase in the Styldrift Project expenditure. Replacement capital involves the Phase II and Phase III Boschkoppie decline extension projects, and reduced marginally to R168.6 million. Stay-in-business capital expenditure increased to R52.4 million, which is 6.1% of total operating expenditure and well within RBPlat’s target range of between 6% and 8%.

For further enquiries, please contact:

Lindiwe Montshiwagae
Investor Relations Manager
Tel: +27 (0)11 530 8056
Mobile: +27 (0)82 920 7803

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