Amplats to report R2.2 billion impairments

Published: 18 July 2017

South Africa's Anglo American Platinum (Amplats) on Tuesday advised its shareholders to expect a sharp fall in earnings of between 67% and 45% for the six months to June 30. Amplats will release results for the six months ended 30 June 2017 on the Stock Exchange News Service on 24 July 2017.

The Johannesburg Stock Exchange - listed platinum major which owns Unki platinum mine advised that headline earnings for the first half of the year are likely to decrease to between R550 million and R875 million, compared with last year's restated R1.65 billion, and headline earnings a share to between 210c and 335c a share, compared with last year's restated 629c a share.

The expected earnings decreases are primarily the result of attributable post-tax impairments totalling R2.2 billion, as well as strengthened local currency and a smelter problem, which lowered refined production.

The impairments impacting only basic earnings included R900 million on the sale of the company's interest in Union mine and its shareholding in Masa Chrome, as well as equity interests in Bafokeng Rasimone Platinum Mine of R950 million and Bokoni Platinum Holdings of R45 million.

The impairments that impacted basic earnings and headline earnings include the write-down of a term loan to platinum company Atlatsa, operator of the Bokoni joint venture, and a loan to the Bakgatla Ba-Kgafela community related to their interest in the Union mine.

In addition, earnings were hit by a "significant" rand strengthening and lower sales volumes on impacted refined production, which fell as a result of last year's Waterval furnace number 1 smelter run-out and Waterval furnace number 2's first-quarter rebuild.

Furthermore, on June 4, 2017 a high-pressure water leak at the Anglo Converter Plant (ACP) created a backlog of material, deferring 90 000 oz of refined production into the second half of this year. The second converter plant (Phase B) was heated up and returned to steady state production 10 days later. The time required to reheat Phase B created a backlog of material, deferring 90,000 ounces of refined production from Q2 2017 into H2 2017.

The result of the planned rebuild of Waterval number 2 furnace and an ACP Phase A event impacted refined production for the period, lowering sales volumes, the company said in a release to Business Daily.

In a release done in June, the company expected its results to even out, as the build-up of work-in-progress material of 65 000 oz, as a result of the rebuild of Waterval Furnace Number 1 in the fourth quarter of 2016, followed by the planned rebuild of Waterval Furnace Number 2 in the first quarter of this year, will result in more material being refined in the second half.

Waterval Furnace Number 2 is already operating at steady state.

- Business Daily