ANGLO American Platinum (Amplats), the world's biggest producer of the metal, suspended dividend payments for its interim period as net debt grew to R9,54bn, and it lowered its full-year production target.
In results for the six months to the end of June, Amplats said operating free cash flow was down 155%, resulting in a net outflow of R2,6bn, which led to a "significant increase" in net debt and the decision to suspend the dividend.
Amplats posted a 78% decline in headline earnings to R713m because of reduced sales volumes and weaker prices for rhodium and nickel.
Refined platinum production and sales were down 21% and 13% respectively, it said. This was because of the delayed start of its converter plant.
Amplats lowered its production forecast for 2012 to between 2,4-million and 2,5-million ounces of platinum from an earlier target of between 2,5-million oz and 2,6-million oz because of deteriorating demand for platinum. The result of the reduced output was an expected increase in costs.
Amplats said in February the unit cost per equivalent ounce of refined platinum would be between R14000 and R14500. This has now risen to R15000 per ounce because of the fixed cost nature of the business, the company said.
"Amplats... will continue to monitor market conditions closely with a view to reacting to further soft market demand or take advantage of any upturns in demand in the short term," it said.
"We have taken swift and disciplined measures to preserve our balance-sheet position in light of the challenging environment," it said. Together with its joint venture partner, Aquarius Platinum, it has suspended the Marikana mine and Amplats is reviewing the balance of its joint venture portfolio.
In February, Amplats cut its 2012 capital expenditure target by R1bn to R8bn. It has now trimmed it by a further R700m to R7,3bn. "We will also continue to focus on asset optimisation and supply chain management, as well as increasing production from lower cost mines like Mogalakwena," it said.
Amplats is undertaking a review of its entire business and the results will be released by the end of the year.
Neville Nicolau stepped down as CEO of Amplats with immediate effect last Thursday. He will be replaced by Kumba Iron Ore CEO Chris Griffith on September 1. In the interim, Amplats' chief financial officer, Bongani Nqwababa, will act as CEO.