Implats sets production record (August 27, 2004)

Implats (IMPUY-O) released its annual results for the year ended June 30, highlighted by record platinum production of 1.96 million oz.

Platinum production was up 17% over the previous year. The total operating profit stood at US$428 million; this was down 13% from last year. The platinum price per oz. was higher over the year, however the revenue per oz. was lower by 9% because the value of the South African Rand rose in relation to the US dollar.

Sales revenue remained constant at R11.81 billion. The average exchange rate for the year was 6.88 Rand to US$1 (up from 9.06 Rand in the year ended June 30, 2003).

The platinum price varied between US$655 per oz. and US$937 per oz. The average realized platinum price was US$773 per oz. (up 30% from the previous year). The average cost per oz. platinum produced was US$602.

The South African Rand appreciated by 24% causing earnings to decline by 13%. There was a return on assets of 24% and a gross margin of 36%. A dividend of US$3.06 per share (an increase of 4% over last year) will be paid on Sept. 27.

The company recorded increased production at its mines in northwest South Africa and Zimbabwe. Implats operates four mines in total: Impala Platinum, Marula Platinum, Zimplats and Mimosa. These contributed 66% of the profit. Impala Platinum produced 1.09 million oz. of platinum, Zimplats produced 84,300 oz. and Mimosa, 52,800 oz.

Impala Refining Services contributed 13% to profit. It processes third party concentrates, optimizing the processing and refining capacity at the Impala mine. Refining operations operated in excess of their rated capacity.

During the year, Implats increased its ownership of Zimbabwe Platinum Mines by 32.9%, to 83.4%, and sold its stake in Barplats Investments.

Safety performance improved but was marred by ten deaths at Implats various operations. The company is trying to improve on this. The reportable injury frequency rate was 2.75 per million hours worked.

In the next year, Implats has agreed to sell its 27.1% interest in Lonplats for US$800 million. This price represents an 8% premium over the market valuation at the time of the announcement of the sale. The sale is in compliance with the new mining law and will result in empowerment credits.