IMPALA PLATINUM HOLDINGS LIMITED
Registration number 1957/001979/06
Incorporated in the Republic of South Africa
Interim results
for the six months ended 31 December 2000
Half year results exceed 2000 full year record
Highlights
Headline earnings per share increased almost 3 times
Sales revenue up 70% to more than R4.3 billion
Spectacular rise in interim dividend - more than quadrupled to 1 420 cps equals
last year's final dividend
Cash returned to shareholders by means of a special dividend of 3 000 cps
Production begins at Crocodile River Mine on time and within budget
Acquisition of Platexco concluded; mining to begin 2002
Impala Refining Services income before tax jumps three and a half times
Close to half a billion Rand earned by mineral rights holders in 6 months
Consolidated income statement
Six months to Six months to Year to
31 December 31 December 30 June
2000 1999 % 2000
Rand million (Unaudited) (Unaudited) change (Audited)
Sales revenue 4 331.9 2 552.5 69.7 6 069.4
Cost of sales 1 505.1 1 535.1 2.0 3 140.4
On-mine operations 1 142.2 1 015.7 12.5 1 997.6
Concentrating and
smelting operations 222.7 212.3 4.9 423.7
Refining operations 136.0 137.8 1.3 272.0
Amortisation of mining
assets 91.1 73.4 24.1 139.9
Other costs 49.0 45.1 8.6 87.9
(Increase)/decrease in
metal inventories (135.9) 50.8 367.5 219.3
Income from metals
mined 2 826.8 1 017.4 177.8 2 929.0
Insurance claim - - - 27.9
Royalties (447.0) (153.7) 190.8 (406.4)
Mining income 2 379.8 863.7 175.5 2 550.5
Income from Impala
Refining Services 178.4 51.9 243.7 149.3
Disposal of subsidiary - - - 26.1
Other income 73.5 5.7 1 189.5 32.5
Net financial income 195.4 110.9 76.2 228.2
Interest received 204.6 127.8 60.1 253.4
Interest paid 9.2 16.9 45.6 25.2
Share of pre-taxation
income from associates 493.5 115.3 328.0 332.8
Income before taxation 3 320.6 1 147.5 189.4 3 319.4
Taxation 1 075.7 368.4 192.0 1 111.9
Income after taxation 2 244.9 779.1 188.1 2 207.5
Outside shareholders'
interest (0.2) 0.6 133.3 2.5
Attributable income 2 245.1 778.5 188.4 2 205.0
Earnings per share (cents)
* basic 3 398 1 183 187.2 3 346
* diluted 3 363 1 169 187.7 3 313
Headline earnings
per share (cents)
* basic 3 398 1 183 187.2 3 307
* diluted 3 363 1 169 187.7 3 273
Cash earnings per share
(cents)
* basic 4 252 951 347.1 4 517
* diluted 4 209 938 348.6 4 471
Weighted average number
of shares in issue
(millions) 66.1 65.8 0.4 65.9
Consolidated balance sheet
As at As at As at
31 December 31 December 30 June
2000 1999 2000
Rand million (Unaudited) (Unaudited) (Audited)
ASSETS
Fixed assets 4 654.2 2 918.5 3 357.3
Investments 885.1 710.7 789.5
Other non-current assets 78.6 85.9 83.5
Current assets 4 566.1 3 005.9 4 504.3
Total assets 10 184.0 6 721.0 8 734.6
EQUITY AND LIABILITIES
Shareholders' funds 6 831.4 4 083.4 4 581.9
Outside shareholders' interest 13.6 47.5 13.8
Provision for long-term
responsibilities 171.8 139.7 167.8
Long-term liabilities 123.6 150.2 137.6
Deferred taxation 988.1 802.2 889.7
Current liabilities 2 055.5 1 498.0 2 943.8
Total equity and
liabilities 10 184.0 6 721.0 8 734.6
Consolidated statement of
changes in equity
Share Share Translation Retained
Rand million capital premium reserves earnings Total
Balance at 31
December 1999 13.2 527.4 (0.1) 3 542.9 4 083.4
Dividends declared (938.1) (938.1)
Net profit
attributable
to ordinary
shareholders 1 426.5 1 426.5
Translation differences
on foreign subsidiary (0.3) (0.3)
Issue of share capital 0.0 10.4 10.4
Balance at
30 June 2000 13.2 537.8 (0.4) 4 031.3 4 581.9
Net profit attributable
to ordinary
shareholders 2 245.1 2 245.1
Translation
differences on
foreign subsidiary 0.1 0.1
Issue of share
capital 0.0 4.3 4.3
Balance at
31 December 2000 13.2 542.1 (0.3) 6 276.4 6 831.4
Dividend
Six months to Six months to Year to
31 December 31 December % 30 June
Cents 2000 1999 change 2000
Dividends per share
(refer to notes) 1 420 340 317.6 1 760
Cash flow statements
Six months to Six months to Year to
31 December 31 December 30 June
2000 1999 2000
Rand million (Unaudited) (Unaudited) (Audited)
Net cash from operating
activities 2 020.8 625.8 2 599.4
Net cash used in investing
activities (1 174.6) (247.7) (686.9)
Net cash used in financing
activities (949.2) (489.9) (719.1)
Decrease/(increase) in cash
and cash equivalents (103.0) (111.8) 1 193.4
Cash at the beginning of
the period 3 106.7 1 913.3 1 913.3
Cash at the end of the period 3 003.7 1 801.5 3 106.7
Statistics
Six months to Six months to Year to
31 December 31 December % 30 June
2000 1999 change 2000
Total production:
Platinum (000 ozs) 673 606 11.1 1 188
Pgm (000 ozs) 1 290 1 203 7.2 2 296
IRS production:
Platinum (000 ozs) 157 71 121.1 168
Pgm (000 ozs) 316 171 84.8 383
Impala production:
Tons ex mine (000 t) 7 818 7 784 0.4 14 662
Refined
pge ounces (000 ozs) 974 1 032 P 5.6 1 913
Refined
platinum (000 ozs) 516 535 P 3.5 1 020
Refined
palladium (000 ozs) 242 264 P 8.3 493
Refined
rhodium (000 ozs) 80 72 11.2 131
Refined nickel (tons) 2 964 3 814 P 22.3 7 194
Revenue per
ounce Pt sold (R/oz) 8 729 4 608 89.4 5 881
Cash cost:
per Pt
ounce refined (R/oz) 3 001 2 635 P 13.9 2 700
per ton ex-mine (R/t) 198 181 P 9.5 188
Average exchange
rate achieved (R/$) 7.36 6.16 19.5 6.40
Free market
price index ($/oz) 1 272 736 72.8 914
Prices achieved:
Platinum ($/oz) 572 377 51.6 424
Palladium ($/oz) 718 361 99.0 462
Rhodium ($/oz) 2 043 889 129.8 1 214
Nickel ($/ton) 7 732 6 147 25.8 7 437
Capital expenditure (Rm) 458 277 65.2 783
Cash net of short-term
borrowings (Rm) 2 980 1 745 70.8 3 081
Cash net of
all borrowings (Rm) 2 856 1 594 79.2 2 944
Number of employees ('000) 28.0 28.0 - 28.3
Notes
The interim financial statements have been prepared using accounting policies
consistent with those of the annual financial statements for the year ended 30
June 2000, except for the adoption of International Accounting Standard (IAS)
10 (revised) (Events After the Balance Sheet Date), as set out on page 2, and
conforms with IAS 34 on Interim Financial Reporting.
Other income includes an amount of R60 million for exchange adjustments.
In contrast to previous reported results and in terms of IAS 10, an interim
dividend and associated secondary taxation on companies (STC), have not been
provided for. Interim dividend no 65 of 1 420 cents per share, amounting to
R938 million, was approved by the board of directors on 7 February 2001. STC on
this dividend will amount to R86 million.
The Platexco transaction was completed on 19 December 2000. The full value of
the mineral rights has been included in the consolidated financial statements
as at that date.
Investments are both listed and unlisted. The directors have valued the
unlisted investments at book value (R799 million) and the listed investments
are valued at cost (R86 million). The market value of the listed investments,
by reference to stock exchange quoted prices and closing exchange rates, was
R430 million.
During the period under review, the company issued 13 360 shares to third
parties.
Long-term liabilities consist of debentures secured by a pledge of freehold
properties, included in mining assets, with a book value of R178 million. Half
of the debentures bears interest at a fixed rate of 18.9% per annum, with the
other half bearing current interest at 12.4% per annum. All are repayable
before 30 June 2004.
Capital expenditure approved at 31 December 2000 amounted to R3 014 million, of
which R937 million is already committed. This expenditure over a period of 5
years will be funded internally and, if necessary, from borrowings. Contingent
liabilities at 31 December 2000, arising mainly from collateral security for
employee housing, amounted to R11 million.
Review
Compared to the corresponding period last year:
* Attributable income and headline earnings per share almost tripled for the
six months to December 2000 to R2 245.1 million and 3 398 cps respectively. In
terms of IAS 10 (revised) STC on the interim dividend is not reflected. If the
STC is taken into account attributable income increased by 177% to R2 159.1
million.
* Sales revenue was up by 70% to R4.3 billion as a result of substantially
higher dollar metal prices of platinum (52%), palladium (99%) and rhodium
(130%). The average Rand revenue per platinum ounce improved by 89% to R8 729.
* The all in exchange rate achieved of R7.36 was 19.5% higher.
* Total platinum production which includes metal sourced from concentrates
purchased from third parties - increased by 11,1%, in line with Implats' growth
objectives, to 673 000 ounces. Platinum production from the Impala lease area
decreased slightly by 3.5% to 516 000 ounces of platinum (974 000 ounces pgm)
primarily as a result of an attempt to treat the stockpile which resulted in
unacceptably low recoveries.
* Cash operating cost per ounce of platinum ex-mine rose by 13.9% due mainly to
above inflation wage increases (9%) and the costs of complying with the
provisions of the new Basic Conditions of Employment Act (2%).
* Impala Refining Services contribution to pre-tax earnings increased by more
than three times to a record R178 million.
* Implats 27% shareholding in Lonplats contributed R494 million equity
accounted pre-tax income, which includes a dividend of R244 million (1999:
R52.9m), up 328%. Higher prices and production contributed to Lonplats'
improved results.
* Capital expenditure was R458 million, mainly on mining decline projects and
processing capacity increases.
* The cash position net of short-term debt increased to R2.98 billion, slightly
down on the cash position at the beginning of the period as a result of the
conclusion of the Platexco transaction.
* The interim dividend declared of 1 420 per share is an increase of 318%.
Mining and Refining
Activities
Impala
* Productivity efficiencies are back up to 42m2 per employee for the six
months. This is only a fraction under the record achieved for the comparable
period of 43m2 last year and gives credence to our belief that the
re-energising of the Fixco process is on track. Attention is now being focused
on three key initiatives identified by the combined management-employee team
relating to productivity, recoveries and head grade improvements.
* Processing of the surface ore stockpile, built up as a result of flooding in
early 2000 commenced during the period. However, this resulted in an
unacceptable loss in recoveries from both current production and the stockpile
because of increased milling rates. This process was stopped and as at the end
of December 2000 a surface stockpile of approximately 350 000 tons remained.
These mined reserves will now be processed after completion of the UG2-plant
capacity upgrade project.
* Tons ex-mine were marginally higher than for the comparable period last year
despite production interruptions at both the No 11 and 14 shafts caused by the
changeover of hoisting equipment to increase capacity as a result of the
decline projects at both these shafts.
* The Refineries continue to produce excellent cost performance with a gross
cost decrease of 1.3% and unit costs, measured by total cost per ounce of
platinum refined, down by 3%. Mineral Processes also delivered a sterling
performance with a gross cost increase of 5% and unit costs, measured in cost
per ton milled, increasing by only 1%.
* The processing expansion projects are well advanced. The UG2 plant upgrade to
increase capacity by 30% and recoveries by 5% is on track for commissioning in
March 2001. The two new convertors and the enhanced acid plant have been
commissioned. The new 38MW furnace is progressing well with the first matte tap
scheduled for March 2001.
* The decline projects are showing good progress with the 14 shaft decline
currently ahead of plan.
* Despite two of our shafts achieving 2 million fatality-free shift awards and
another attaining one million fatality-free shifts, tragically eight employees
died in operations-related accidents during this period. Of particular concern
is the number of explosive-related accidents. The accidents are under
investigation by consultants appointed by the company and the Mines
Inspectorate to determine their causes. In addition a further consulting firm
has also been appointed to investigate the relationship between the fatal
accidents and other safety statistics as the lost time injury frequency rate is
at an all time low.
* Implementation of an Environmental Management System in accordance with
ISO14001 is underway at the Rustenburg operations.
* An assessment of the possible impacts of AIDS on future costs and
productivity is receiving close attention.
Investments to effect cost reductions/productivity gains
* The company continues to focus on the technology initiatives represented by
inter alia Brandrill with respect to Penetrating Cone Fracture technology.
* We remain committed to the cost reduction opportunities offered by the
Philnico project. We are not, however, willing or able to play any role larger
than we have indicated and unless a major nickel player can shortly be
delivered to the project by the sponsors, we will not participate further. We
remain committed to the cost reduction philosophy offered by such projects.
Growth
Mining projects
Winnaarshoek project (Platexco)
* The purchase of 100% of the shares in Platexco Inc, the Canadian-listed
company that owns the Winnaarshoek property, and the acquisition of the mineral
rights to the adjacent properties, (Clapham and portions of both Forrest Hill
and Driekop) was successfully completed, clearing the way for the establishment
of a nearly 200 000 ounce per annum platinum mine on the Eastern Limb of the
Bushveld Complex.
* Negotiations are progressing well with a black economic empowerment entity
which will result in the purchase by a broadly-based consortium of a
significant minority share in the project and representation at project board
and executive committee level.
* Mining activities will commence at the Winnaarshoek project within the next
12 months with full production planned for 2003. At full production the new
mine will increase Implats' ex-mine production by 20%.
Barplats
* Crocodile River Mine
Opencast mining commenced at the Maroelabult section during December 2000. Some
31 000 tons of reef has been mined and on completion of the refurbishment of
the concentrator plant on 17 January 2001, milling operations at 75 000 tons
per month commenced.
* Kennedy's Vale Mine
An initial in-fill drill programme is underway. The main objectives are to
confirm the geological structures and in situ grades that were determined by
the initial drilling programme conducted in the 1980s. Further work in
preparation for a full feasibility programme is dependant on these results.
Exploration
* Drilling at the River Valley property, (a joint venture arrangement with
Mustang Minerals Corporation near Sudbury, Canada) has produced encouraging
initial results. Twelve widely spaced shallow drill holes have been completed
along one kilometre of the 4.5 kilometre north contact with primary pgm
enrichment identified in two discrete layers. One layer yielded up to 0.71 g/t
palladium, platinum and gold across 49 metres. A second layer assayed 9.15 g/t
palladium, platinum and gold over one metre. The results demonstrate the
presence of a distinct mineralising system and local zones of high grade pgm
mineralisation. Drilling is continuing with 13J000 metres (50 boreholes)
remaining to complete the 17 000 metres first and second phase programmes.
Detailed results have been posted at www.implats.co.za and
www.mustangminerals.com.
* At Birch Lake (a joint venture with Beaver Bay JV), near Duluth, Minnesota,
USA, the first phase of drilling has been completed. Eleven boreholes were
drilled. The drill programme was designed to improve the resource base and
evaluate possible controls on the mineralisation. The zone of mineralisation
has been extended on strike and wider zones of mineralisation than previously
anticipated have been intersected, resulting in a significant increase in the
potential tonnage. Assessment of all the exploration to date is underway and
further work is under consideration.
Leveraging surface assets
Impala Refining Services Limited (IRS)
* Impala Refining Services continues to deliver strong growth both in
contributions to income and in the increase in total ounces of pgms produced.
Income before interest and tax increased by 243.7% to R178.4 million.
* Total platinum production increased by 121% to 157 000 ounces; of this
90 000 ounces was returned to toll refining customers.
* Kroondal Platinum Mines Limited continues to build to full production and
contributed significantly to IRS profits.
Strategic interests
Aquarius Platinum Limited
* The strategic alliance with Aquarius Platinum Limited has strengthened
markedly with the conclusion of the sale by Implats to Aquarius' South African
subsidiary Aquarius Platinum (SA) Limited of the mineral rights in Everest
South and Chieftains Plain for a 25.5% equity interest in that subsidiary.
Aquarius Platinum (SA) Limited is also the owner of the 85 000 platinum oz per
annum Marikana project and the agreement between Implats and Aquarius provides
for a life of mine concentrate off-take agreements in respect of each of these
projects similar to the arrangements with Kroondal.
The market
* As was the case during the comparable period last year uncertainty regarding
Russian pgm supply, coupled with robust demand has raised the platinum price,
this time to a 13-year high and palladium again to an all-time high.
* Demand for platinum in substitution for palladium in autocatalysts was
somewhat offset by a levelling off of demand in the Chinese jewellery market.
This demand was adversely affected by higher prices and the threat of
prosecutions of jewellery manufacturers in that country for potential
contravention of the VAT laws.
* Supply demand fundamentals indicate that current expansion plans are
necessary simply to balance the market. Therefore while prices are unlikely to
be sustainable indefinitely at these levels, not only is no significant retreat
anticipated but Implats believes that prices will remain firm in the medium
term and platinum prices over the next three years will trade in excess of
US$500. That has occurred only once before in the late 1980s but then the
average Rand revenue per ounce of platinum reached a range of only R1 465 to R2
089 compared with the forecasted range for the next three years of R8 886 to R9
625.
Prospects
* In the current climate any substantial strengthening of the Rand against the
US$ is not anticipated. This means that another year of record profits is
assured.
* The dividend declared is in line with a dividend cover of 1.9 on attributable
earnings and at the high end of the interim dividend policy of 30-35% of
anticipated full year dividend.
* Exceptional revenues realised over the past months have resulted in a
significant cash balance. This amount exceeds the requirements of the company
both to fund the capital intensive programme to maintain production from
existing operations at the 1 to 1.1 million platinum ounces per annum level and
to grow in production by at least 50% over the next five years.
Special Dividend
* In light of the positive view of the market and the fact that Implats has
sufficient cash to pursue its growth objectives, while at the same time
maintaining prudent cash management, a special dividend of 3 000 cents per
share was declared.
Interim Dividend
* An interim dividend of 1 420 cents per share has been declared based on the
improved results.
On behalf of the board
JM McMahon
J G Smithies Directors
8 February 2001
Declaration of special dividend
In light of the positive view of the market and the fact that Implats has
sufficient cash to pursue its growth objectives, while at the same time
maintaining prudent cash management, the Board of Directors has today declared
a special dividend of 3 000 cents per share payable to members registered in
the books of the company on 9 March 2001. The register of members will be
closed from 12 to 23 March 2001 inclusive. The dividend is declared in the
currency of the Republic of South Africa. Payments from the London transfer
office will be made in United Kingdom currency at the rate of exchange ruling
on 27 March 2001 or on the first day thereafter on which a rate of exchange is
available.
Dividend warrants will be posted on 5 April 2001.
The full conditions of payment may be inspected at the offices of the transfer
secretaries of the company.
By order of the board
AM Snashall Johannesburg
Group Secretary 7 February 2001
Declaration of interim dividend
An interim dividend of 1 420 cents per share in respect of the six months ended
31 December 2000 has been declared payable to members registered in the books
of the company on 9 March 2001. The register of members will be closed from 12
to 23 March 2001 inclusive. The dividend is declared in the currency of the
Republic of South Africa. Payments from the London transfer office will be made
in United Kingdom currency at the rate of exchange ruling on 27 March 2001 or
on the first day thereafter on which a rate of exchange isJ available.
Dividend warrants will be posted on 5 April 2001.
The full conditions of payment may be inspected at the offices of the transfer
secretaries of the company.
By order of the Board
A M Snashall Johannesburg
Group Secretary 8 February 2001
For more information contact the
Group Secretary via e-mail at alan.snashall@implats.co.za or by post at POBox
61386, Marshalltown 2107 South Africa, Tel: 27 11 481 3900
Registered office
3rd Floor, Old Trafford 4, Isle of Houghton, Boundary Road, Houghton 2198
(P.O.Box 61386, Marshalltown 2107)
Transfer secretaries
South Africa:
Mercantile Registrars Limited, 8th Floor, 11 Diagonal Street, Johannesburg 2001
(P.O. Box 1053, Johannesburg 2000)
United Kingdom:
Lloyds Bank Registrars, The Causeway, Worthing, West Sussex, BN99 6DA
Directors
JM McMahon* (Chairman), JG Smithies* (Chief Executive Officer), DH Brown, PG
Joubert, CE Markus, MV Mennell, L Molotlegi, DM O'Connor, MF Pleming, JV
Roberts. Secretary: AM Snashall
*British** Canadian
http://www.implats.co.za
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