Mining. Picture: THINKSTOCK
Mining. Picture: THINKSTOCK

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IMPALA Platinum (Implats), the world’s second-largest platinum producer, will raise up to R4bn in a rights issue to fund two new-generation mines as it scales back output from its operations by 180,000oz of platinum over the next five years.

Implats withheld its full-year dividend.

The company will conduct an accelerated book-building process in the equity issue that is fully underwritten by UBS and 49% of shareholders have given their written support for the transaction. Implats needs 75% support for the issue.

Implats will close its 8 shaft and the mechanised operations at its 12 shaft because they are not profitable at current metal prices. The closures will happen by the end of December this year and would account for 145,000oz of the 180,000oz reduction.

Implats forecast production from its own mines would total between 815‚000oz and 830‚000oz by 2020‚ down from an earlier forecast of 850‚000oz.

The Impala Lease Area‚ which is where Implats’ own mines are‚ would reduce output by a cumulative 180‚000oz over five years as it curtails capital expenditure and closes some areas‚ the company said.

Implats had R2.6bn in cash at the end of its financial year in June and unused debt facilities of R3bn, which has been expanded to R3.5bn.

"In the current price environment, the group’s priorities have been materially rebalanced to focus on profitability and cash preservation. It is nevertheless critical to safeguard the completion of key capital projects to secure the long-term value of the group," the company said.

The new-generation mines are the 16 and 20 shafts, which need R3.9bn to complete over the next three years and replace the older, low-cost shafts, which will be mined out in coming years. Implats has spent R13bn on the two new shafts so far.

Implats will cut costs by R1.57bn in the current 2016 financial year, through a host of measures, including rescheduling development expenditure and contracts in SA and Zimbabwe, as well as by trimming head office costs.

It has further slowed development work at its new 17 shaft, extending the delay on the project by an additional 18 months over the plan it unveiled in February this year. Implats will spend R520m on the mine over the next two years.

Output from Implats’ own mines fell 1.2% in its 2015 financial year to 567,500oz of platinum, including the reduced contribution from Zimbabwe where its Bimha mine was temporarily closed.

Implats’ full-year revenue was 12% higher at R32.5bn on the back of higher metal sales and a weaker rand offsetting a fall in the dollar price of platinum group metals (PGMs).

Gross profit, however, fell by half to R1.6bn and the company reported a net impairment of R3.7bn. It recorded an attributable loss of R3.66bn compared with an R8m profit before.

Implats reported a basic loss per share of 603c for the year, down from earnings of 1c the year before.

"Following the operating and capital cost cutting response, the group is expected to be ebitda (earnings before interest, tax, depreciation and amortisation) positive in the current PGM price environment and free cash flow positive across the Impala Lease Area and IRS (Impala Refining Services), before replacement and development expenditure."