Impala Platinum Expects 7.6% Output Drop This Year; Profit Beats Estimates
Stock Chart for Impala Platinum Holdings Ltd (IMP)
Impala Platinum Holdings Ltd. (IMP), the world’s second-largest producer of the metal, expects output to decline 7.6 percent this fiscal year because results last year included some volumes from competitor Lonmin Plc.
Output may fall to 1.7 million ounces in the year through June 2012 from 1.84 million ounces, said Chief Executive Officer David Brown. Volumes through June 2011 helped boost earnings excluding one-time items by 41 percent to 11.05 rand ($1.53) a share, Impala said today in a statement. That beat the 10.92- rand average estimate of three analysts surveyed by Bloomberg.
Last year’s production results benefited from a “one-off treatment from Lonmin,” Brown told reporters on a call. Impala also suspended output at its new No. 20 shaft in South Africa for “infrastructure development,” deferring 26,000 ounces by a year to fiscal 2013, he said.
The Johannesburg-based company mines more than a fifth of the world’s platinum, mainly in South Africa, which has the largest reserves of the metal used in jewelry and car pollution devices. Impala is spending 35 billion rand over the next five years to expand production as rising demand drives up prices.
Impala fell 4.40 rand, or 2.6 percent, to 165.50 rand in Johannesburg trading, giving a decline this year of 29 percent. Anglo American Platinum Ltd., the largest producer of the metal, has lost 19 percent to 562.33 rand in the period.
Impala, the most profitable of the large platinum miners, is seeking to boost annual output to more than 2 million ounces by 2014, benefiting from a forecast supply shortfall of about 135,000 ounces next year, according to data on its website. The metal, which touched $1,831 an ounce in London today, may climb to $1,950 in the next six to nine months, Brown told reporters.
The company also produces platinum and related metals in Zimbabwe, where it’s in talks with the government after President Robert Mugabe demanded that foreign companies transfer control of mines to local people.
“We are confident that we will find a solution,” Brown said today. More than 40 percent of the company’s attributable mineral resources are in Zimbabwe. “An appropriate level of ownership will be the final result,” he said, adding that the 51 percent local-equity requirement is “hugely problematic.”
Impala has also been fighting a dispute over prospecting rights at the Afplats project, a venture in the Bushveld Complex in South Africa’s North West Province. The dispute, which followed South Africa’s award of rights in the area to a third party, was resolved in Afplats’ favor, Impala said in a website statement today.
The country’s online prospecting application system, opened this year, has had “unintended consequences,” Impala said, adding that several other licensing areas have been affected.
Impala will probably decide between February and May whether to go ahead with its Afplats mine project, Brown told Bloomberg today. An initial cost estimate is 6 billion rand to 7 billion rand, he said.
The company will seek to cap rand-per-ounce cost increases at 9 percent this fiscal year, even as electricity and labor expenses in South Africa rise faster than inflation, Brown said.
Impala’s platinum reserves totaled 35 million ounces as of June 30, a 5 percent decline from a year earlier, the company said, citing changes in the “mine plan” at its Marula Platinum unit and depletion of reserves.
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