IMP 201808020005A
Strategic Update - Impala Rustenburg review

(Incorporated in the Republic of South Africa)
Registration number: 1957/001979/06
Share codes: 
ISIN: ZAE000083648
ISIN: ZAE000247458 
(Implats or the Company or the Group)

Impala Rustenburg review
2 August 2018

The Impala Rustenburg strategic review has been completed 

- Optimisation measures in the prevailing low platinum price environment are not sufficient to secure the 
  economic viability of the operation
- Structural changes are required to restore the operation to long-term profitability
- The Implats board has approved a turnaround strategy that will transition Impala Rustenburg to long-term 
  economic viability in a low price environment, over the period FY2018 to FY2021:                        
  - Mining footprint to contract from 11 to six operating shafts as operations are ceased at depleted, 
    end-of-life and uneconomical shafts                                                                   
  - Platinum group elements (PGE) mill grade to increase from 4.09g/t to 4.25g/t and the Merensky:UG2 ratio 
    to increase from 42% to 50%                                                                      
  - Production guidance revised from 750 000 to 520 000 ounces platinum per annum, removing non-profitable 
    platinum production from an over supplied market                                                   
  - Total labour complement (employees and contractors) to reduce from 40 000 to 27 000
  - Real operating costs to decrease from R25 100 per platinum ounce in FY2017, to less than R22 000 per 
    ounce in FY2021 (2018 terms)                                                                         
  - Real stay-in-business (SIB) capital expenditure to reduce from R2 800 per platinum ounce in FY2017, 
    to less than R2 000 per platinum ounce (2018 terms), due to infrastructure efficiency improvements      
  - Replacement capital to reduce from R820 million per annum in FY2018, to R120 million in FY2021 and 
    thereafter to zero in FY2023 in line with the completion of the 16 and 20 shafts replacement projects      
  - Once-off restructuring costs of approximately R2.7 billion expected during FY2019 and FY2020
- The restructuring plan will be funded from internal cash, current facilities and the monetisation of some 
  inventory stocks
- A staged implementation over a two-year period mitigates implementation risks and socio-economic impacts 
- Implats will execute the transition in a socially responsible manner and engage with all key stakeholders  
  to mitigate the potential social impact as far as practically possible. This will include consideration  
  and development of potential commercial options to minimise job losses
- Impala Rustenburg in its new form will remain a key asset within the Group with two modern shafts and 
  strategic processing assets


To sustainably improve its competitive position, profitability and financial returns, Implats has committed to a
value-focused strategy. The Group intends to reduce its exposure to higher-cost and less flexible, labour-intensive
operations to improve flexibility, capacity and sustainably generate attractive returns in a changing market and 
operating environment.

This change in strategic orientation has been impacted by a significant and sustained decline in the US dollar 
platinum price and continued high mining cost inflation. Cost pressure is particularly acute in older, deeper 
labour-intensive conventional Platinum Group Metals (PGM) mines located on the Western Limb of the Bushveld 
Complex. Implats has therefore placed a clear emphasis on developing a portfolio of long-life, low-cost, shallow, 
modern mechanised mining assets to sustainably deliver improved returns to all its stakeholders. 
Implats has previously highlighted several key strategic focus areas, including:
- A commitment to responsible and ethical business conduct and to achieving its zero harm goals
- Enhancing the competitive position of the asset portfolio by:
  - Eliminating loss-making production
  - Enhancing shareholder returns from Zimbabwean operations
  - Growing exposure to low-cost mechanised and palladium-focused operations
- Prudent capital allocation
- Improving organisational effectiveness

Good progress has been made on many of these key focus areas, notably:
- Delivering a much improved safety performance during the second half of FY2018
- Effecting an operational and financial turnaround at Marula
- Converting the special mining lease at Zimplats into two new mining leases, and placing the assets in a stronger
  position to sustain and grow future financial returns
- Securing the profitable third-party PGMs toll treatment business and seeking new opportunities to grow the 
  business by leveraging the Groupís available processing capacity
- Acquiring a 15% interest, with an option to move to a control position, in the potential low-cost, mechanised,
  palladium-focused Waterberg project, which could provide additional geographic and commodity diversity for 
  the Group
- Issuing new 2022 convertible bonds to maintain a strong liquidity position

The Groupís portfolio is now well positioned and profitable at current metal prices, with the clear exception of
Impala Rustenburg. A strategic review of this operation was undertaken with the aim of restoring the business to
profitability as soon as practically possible. 

The strategic review considered a range of measures to optimise and reposition the business. Taking account of 
the current operating environment and macro-economic realities, the strategic review concluded that a fundamental 
business restructuring was the only viable option to secure a long-term future for the operation. A radical and 
urgent transition into a leaner, more focused and profitable operation is critical to support the future success 
of the Group.

The platinum market has been in a sustained industrial oversupply for some time. The price of the metal has been
further impacted by a recent unrelated but concurrent erosion in diesel passenger car sales and contraction in 
Chinese jewellery demand. Discounting a concerted return to platinum in gasoline auto-catalyst systems, the 
market is not expected to shift into a fundamental industrial deficit until 2022, when demand is again expected 
to outpace supply.

In contrast to platinum, the fundamentals for both palladium and rhodium remain strong. This is largely premised 
on the sustained preference for gasoline-based passenger cars and ever tightening global emission regulations. 
However, platinum as the dominant revenue contributor in the South African PGM industry has inhibited rand basket 
price growth offsetting palladium and rhodium price increases. Operating costs, on the other hand, have increased 
markedly due to above-inflation increases in labour and electricity costs, and declining productivity largely as 
a result of more stringent mining designs, methods and procedures to achieve the critical improvements required 
in industry safety performance. Lower prices and rising costs have had a devastating impact on the PGM industryís 
profitability, triggering significant reductions in capital expenditure and shaft/mine closures. The PGM industry 
has removed some 1.5 million ounces of platinum capacity since 2008. Western Limb producers have been most 
severely impacted, driven by the costs associated with operating deep, labour-intensive, conventional mines 
with older infrastructure, whereas shallow, mechanised mining operations located in other areas have largely 
managed to sustain profitability.

The only option for conventional producers is to fundamentally restructure loss-making operations to address cash 
burn and create lower-cost profitable businesses that can sustain operations and secure employment as far as 

Business optimisation
Impala Rustenburg has implemented a range of business improvement and cost reduction programmes over the past 
few years to mitigate losses from a sustained low platinum price and escalating costs, including the Phakamisa 
Rustenburg project initiated in January 2017. 

Key operational improvements realised during the 2018 financial year include:
- A much improved safety performance during the second half of the year
- Year-on-year operational performance improvements, including a 5% increase in tonnes milled per total 
  employee costed, a 1% improvement in PGE mill grade and a 2% increase in platinum ounces produced in concentrate
- A cost saving of R330 million, a 4% improvement in the real cost per platinum ounce produced in concentrate
  (excluding once-off restructuring costs), a net reduction of 2 100 employees and the removal of R2.8 billion 
  from the business plans for the next two financial years
- A six-year extension to the life of mine of 6 Shaft and improved shaft economics at 14 Shaft through ceasing 
  UG2 production and growing mechanised Merensky mining

However, notwithstanding the ongoing operational improvements achieved, Impala Rustenburg has continued to incur
significant cash losses. Substantial structural changes are therefore required to restore Impala Rustenburg to 
sustainable economic viability.

Transformational restructuring measures
To determine the most effective structural changes required to return Impala Rustenburg to profitability in the
prevailing platinum price environment, a strategic review was initiated in FY2018 and concluded that Impala 
Rustenburg must transition into a smaller, more focused operation positioned around its best assets. 
Operations will therefore cease at depleted, end-of-life and uneconomic shafts and future mining activity 
will be focused on profitable, lower-cost, high-value, longer-life assets.

In order to achieve this, key operational actions will be implemented: 
- 6, 10 and 11 shafts and E&F will continue to operate
- 16 and 20 shafts will be ramped up to design capacity and continue to operate at steady state thereafter
- 4 Shaft reserves have been depleted and mining operations ceased in FY2018
- 1 and 9 shafts are in decline with limited reserves remaining and will be harvested to reduce costs until 
  they are closed or sold in FY2019
- 12 and 14 shafts will continue to operate while disposal alternatives are investigated
- In the absence of viable commercial options, mining operations at 12 and 14 shafts will terminate in FY2020
- Underutilised mine infrastructure, utilities and services such as fridge plants and ventilation fans will be
  suspended to match the reduced production profile
- The number of operating milling circuits at the concentrator complex will reduce in line with lower 
  production volumes and one of the three furnaces at the smelting facility will be placed on care-and-maintenance 
  from FY2021
- Minor modifications will be effected to the acid plant circuit to maintain smelting efficiencies and continued
  treatment of planned toll-refining material
- Shared services and overhead labour will be reduced by a further 1 500 positions to achieve a fit-for-purpose
  lower-cost operating model

Restructuring impact and benefits
The structural changes at Impala Rustenburg will fundamentally reposition the business:
- Smaller focused operating footprint around the best shafts
  - Operating shafts reduce from 11 during FY2018 to six in FY2021
  - Operating shafts include the new generation 16 and 20 shafts, which will result in increased infrastructure
    efficiency and overall productivity
  - Production will decline to 520 000 ounces platinum per annum from FY2021, down from the previous guidance 
    of 750 000 ounces per annum
  - Full time employees and contractors will decline from 40 000 at the end of FY2018 to 27 000 from FY2021

- Robust life-of-mine plan
  - Targeting better areas of the ore body, PGE mill grade at selected shafts will increase from 4.09g/t 
    in FY2018 to 4.25g/t in FY2021, and the Merensky:UG2 ratio from 42% to 50%
  - Significant future optionality to extend the life of mine
  - Commercial transactions will be explored that could provide further upside potential

- Lower-cost operation
  - Real operating costs are expected to reduce from R25 100 per platinum ounce in FY2017, to less than 
    R22 000 per ounce in FY2021 (2018 terms) creating a more robust, lower-cost, cash-generating business 
    by FY2021
  - Cost improvement principally achieved through realising structural improvements in mining efficiency as 
    a result of discontinuing mining activity at high-cost operations and concentrating future activity at 
    more efficient lower cost operations
  - Realising a 25% increase in tonnes milled per total employee costed, a 5% improvement in PGM(6E) mill 
    grade and a 25% increase in Merensky ore content in FY2021 compared to FY2017
  - Further aided by the planned ramp-up at 16 and 20 shafts and additional cost-saving initiatives
- Reduced capital intensity
  - SIB capital expenditure expected to reduce from R2 800 per platinum ounce in FY2017 to less than 
    R2 000 per ounce in FY2021 (2018 terms)
  - Principally achieved through a significantly reduced operational footprint and newer future mining 
    infrastructure, which requires less ongoing SIB capital expenditure
  - Aided by the replacement capital expenditure programme at 16 and 20 shafts, which ends in FY2023

In its revised form, Impala Rustenburg will remain a key asset in the Groupís portfolio. Continual improvement 
in safety, productivity and cost efficiency will be pursued in addition to the structural changes. Any material 
changes in operating and business performance, or the pricing environment will be considered to further 
optimise the transformation strategy.

Mitigating social impact
As a southern African producer, Implats is fully committed to a socially responsible ethos and is sensitive to 
the potential impact of the strategic restructuring process at Impala Rustenburg on employment, local economic 
development and host communities. 

The restructuring process may potentially have an impact on 9 000 direct jobs and 4 000 contractor positions 
over the implementation period. While labour rationalisation is inevitable in a restructuring process of this 
nature, due care will be taken to ensure that forced job losses are minimised as far as possible through a range 
of job loss avoidance measures. These include the transfer of skills to vacant positions at the 16 and 20 growth 
shafts, reskilling, voluntary separation, business improvement and exploring commercial options to dispose of 
shafts that do not fit the long-term portfolio.

Where job losses are unavoidable, Impala Rustenburg remains committed to implementing the required changes in 
consultation with all its social partners. Discussions are already underway with key stakeholders, including 
government, relevant trade unions and community representatives with regard to this difficult transition to 
secure the future viability of the operation and preserve jobs as far as possible.

Successfully transforming the Impala Rustenburg operation will result in a cash-generating business by FY2021 in 
the current low metal price environment and the sustainable delivery of benefits to all its key stakeholders, 
including securing 27 000 jobs for the long term. 

A material consequence of the declining profitability of the Impala Rustenburg operation has been the negative impact
on the Groupís balance sheet, which has weakened over the last year. This was further impacted by the inventory lockup 
following the fire at Number 5 furnace. Negative cash flows recorded at the operation in recent years and the capital 
investment to develop 16 and 20 shafts, have been funded from cash flows from other Group operations as well as 
external sources, including an equity raise and convertible bond issue totalling more than R10 billion. The Groupís 
cash position at the end of FY2018 has been further eroded by ongoing losses and once-off events, reducing the 
liquidity position of the Group and its ability to fund the operations in a sustained low platinum price environment. 
Returning Impala Rustenburg to profitability is critical for the Group to remain economically viable, to honour its 
obligations to providers of external capital and sustainably deliver benefits to all its stakeholders.

Funding plan
It is anticipated that the strategic review will take two years to implement, returning Impala Rustenburg to
profitability by FY2021 and resulting in approximately R2.7 billion once-off restructuring costs. Impala Rustenburg 
is expected to deliver ongoing negative operating cash flows over this period totalling some R4.0 billion. In addition 
to this funding requirement, the Group also has an obligation to settle the Marula BEE debt of R875 million, which 
falls due in FY2020. 

Implats has reviewed its existing financial resources to ensure the Group remains fully funded throughout the
implementation of the strategic review. Additional liquidity and headroom have been addressed through three components: 
- Forward sale
  Liquidity has been reduced by a build-up of approximately R3.8 billion in excess pipeline stocks following the
  Number 5 furnace fire. To address this, excess pipeline stock from FY2020 will be monetised early by means of 
  a forward sale to release approximately R2.0 billion in cash in FY2019, without impacting contractual deliveries 
  to customers.
- Revolving credit facilities
  Implats has revolving credit facilities (RCF) with its lender group totalling R4.0 billion, which are available 
  until FY2021. Implats has engaged with its lender group and they are supportive of the strategic review 
  implementation plan. (Discussions are under way to convert the existing bilateral facilities into a single 
  R4.0 billion RCF to further enhance headroom and flexibility).
- Group cash
  The Group is expected to have a positive cash balance in FY2018 and FY2019, supported by cash flow from other 
  Group operations. The cash position considers the payment of all debt obligations during this period, including 
  the repayment of the Marula BEE debt. Remaining Group debt is either serviced by operational cash flow at 
  subsidiary level (Zimplats) or is long-dated beyond the strategic review implementation period.
The combination of the forward sale, R4.0 billion in RCFs and Implatsí existing cash on hand of approximately 
R2.2 billion will be sufficient to fund the implementation of the strategic review. As the market and operating 
environment evolves, Implats will continue to review its funding strategy to ensure an efficient and effective 
capital structure is maintained. 

Following the implementation of the strategic review, all Group operations are anticipated to be profitable 
within the prevailing low platinum price environment. The Group is therefore expected to be in a fundamentally 
better position to deliver sustainable returns to all stakeholders over the long term.

The implementation of the strategic review outcomes will create a more focused Impala Rustenburg business centred
around its best assets with higher quality long-life ore bodies and lower operating costs and capital intensity. 
This will return the operation to profitability in a lower platinum price environment. 

In addition, the strategic review provides the following outcomes:
- Removes unprofitable platinum production from a well-supplied market
- Secures future optionality in a more positive pricing environment
- Provides value accretive commercial opportunities for Impala Rustenburg
- Secures 27 000 jobs at the operation in a low platinum price environment
- Ensures that local communities continue to participate in procurement, employment and other socio-economic
  opportunities over the long term
- Produces a more robust cash-generating business by 2021

The implementation of the strategic review will not only strengthen Impala Rustenburgís position in the prevailing 
low platinum price environment, but will also significantly improve the strategic position of the Implats Group to
sustainably deliver improved returns to all stakeholders in the medium to long term.


                                        FY2017      FY2018        FY2019        FY2020        FY2021    Long-term    
Description                   Unit      actual    estimate      estimate      estimate      estimate     estimate    
Number of shafts                No          12          11            10             8             6            6    
Tonnes milled                   kt        10.1        10.9          11.3          10.7           8.1          8.0    
Ore split (Merensky)             %          40          42            43            45            50          >50    
Headgrade 6E                   g/t        4.06        4.09          4.10          4.15          4.25         4.30    
Stock adjusted Pt refined    000oz         646         658           680           660           520          520    
Unit cost 1                R/Pt oz      25 100      24 015       <23 800       <23 000       <22 000      <22 000    
SIB capital 2              R/Pt oz       2 800       2 960        <2 400        <2 400        <2 000       <2 000    
Replacement capital 2           Rm         707         818           550           260           260          120    
Restructuring cost 2            Rm           -         525           500         1 600             -            -    
All-in unit cost           R/Pt oz      29 000      29 017       <28 000       <28 300       <24 500      <24 500    
Employees                       No      32 235      29 529 2    c.28 200 3    c.27 000 4    c.20 500     c.20 500    
Contractors                     No      10 018      10 550 2    c.11 600 3     c.7 700 4     c.6 500      c.6 500    
1 Cost in FY2018 real terms excluding restructuring cost.
2 Cost in FY2018 real terms.
3 As at 30 December 2018
4 As at 30 December 2019.

To access the presentation and webcast supporting this release, please refer to

Any forward looking information contained in this update has not been reviewed or audited by the Companyís external

2 August 2018
Sponsor to Implats
Deutsche Securities (SA) (Pty) Ltd

Contact details and administration
Registered office
2 Fricker Road
Illovo, 2196
Private Bag X18
Northlands, 2116
Telephone: +27 (11) 731 9000
Telefax: +27 (11) 731 9254
Registration number: 1957/001979/06
Share codes: 
ISIN: ZAE000083648
ISIN: ZAE000247458
(Implats or the Company or the Group)

Impala Platinum Limited and 
Impala Refining Services 
Head office
2 Fricker Road
Illovo, 2196
Private Bag X18
Northlands, 2116
Telephone: +27 (11) 731 9000
Telefax: +27 (11) 731 9254

Impala Platinum (Rustenburg)
PO Box 5683
Rustenburg, 0300
Telephone: +27 (14) 569 0000
Telefax: +27 (14) 569 6548

Impala Platinum (Refineries)
PO Box 222
Telephone: +27 (11) 360 3111
Telefax: +27 (11) 360 3680

Marula Platinum
2 Fricker Road
Illovo, 2196
Private Bag X18
Northlands, 2116
Telephone: +27 (11) 731 9000
Telefax: +27 (11) 731 9254

1st Floor
South Block
Borrowdale Office Park
Borrowdale Road
Harare, Zimbabwe
PO Box 6380
Telephone: +26 (34) 886 878/85/87
Fax: +26 (34) 886 876/7

Deutsche Securities (SA) (Pty) Ltd

Impala Platinum Japan Limited
Uchisaiwaicho Daibiru, room number 702
3-3 Uchisaiwaicho
1-Chome, Chiyoda-ku
Telephone: +81 (3) 3504 0712
Telefax: +81 (3) 3508 9199

Company Secretary
Tebogo Llale

United Kingdom secretaries 
St Jamesís Corporate Services Limited 
Suite 31, Second Floor
107 Cheapside
United Kingdom
Telephone: +44 (020) 7796 8644
Telefax: +44 (020) 7796 8645

Transfer secretaries
South Africa
Computershare Investor Services (Pty) Ltd
Rosebank Towers
15 Biermann Avenue, Rosebank
PO Box 61051, Marshalltown, 2107
Telephone: +27 (11) 370 5000
Telefax: +27 (11) 688 5200

United Kingdom
Computershare Investor Services plc
The Pavilions 
Bridgwater Road 
BS13 8AE

PricewaterhouseCoopers Inc.
2 Eglin Road, Sunninghill 
Johannesburg, 2157

Johan Theron
T:  +27 (0) 11 731 9013/43
M: +27 (0) 82 809 0166
Alice Lourens
T:  +27 (0) 11 731 9033/43
M: +27 (0) 82 498 3608

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