Implats to shut Ontario mine

Impala Platinum (JSE: IMP; US-OTC: IMPUY), widely known as Implats, is shutting its mine in northern Ontario next May because of low palladium prices, a company spokesperson confirmed.

The closure of the Lac des Iles mine, which employs about 750 workers 90 km northwest of Thunder Bay, isn’t a surprise. The company said in February it was considering the move.

“We’ve been in a prolonged period of low prices,” Emily Robb said by email on Thursday. “As a result, the business is not generating the cash flow required to sustain the operation despite the team’s strong performance.”

Shares in Implats have gained 3.6% this week to close at 171 rand apiece on Thursday in Johannesburg, valuing the company at nearly 155 billion rand ($8.72 billion).

Prices up

Prices for palladium are actually up 18% this year to $1,078.62 per oz. as of mid-June, near the highest level since November. But the longer-term trend is for a market surplus next year, according to producers group the World Platinum Investment Council. Palladium’s primary use, in the catalytic converters controlling gasoline engine pollution, is waning as consumers shift to electric vehicles.

CEO Tim Hill said the exact closure date would depend on factors such as available tailings capacity and meeting production targets, according to an internal memo Robb forwarded.

“We have plenty of work to do: we must continue to prioritize safety, operate efficiently and plan for the responsible closure of the mine,” Hill said. “Let’s keep our collective focus on safety and excellence, so we can complete this last year at the mine with our heads held high, proud of what we’ve accomplished together.”

1/3 of output

In fiscal year 2023, Lac des Iles delivered about 291,000 oz. of total production of the six platinum group elements – roughly one-third of Implats’ global refined output – and around 250,000 oz. of palladium, accounting for nearly a quarter of the company’s total palladium production.

Impala bought its mine, which has underground and pit operations as well as a concentrator, for $758 million in 2019. It’s been operating since 1993.

The closure decision comes as Generation Mining (TSX: GENM; US-OTC: GENMF) starts construction on its C$992-million capex ($725 million) Marathon copper-palladium project in the same region. Annual output over a 13-yer mine life is forecast at 42 million lb. of copper, 168,000 oz. of palladium, 38,000 oz. of platinum, 12,000 oz. of gold and 240,000 oz. of silver.