Impala Platinum (Implats) is fully focused on returning its Rustenburg mines to profit, diverting all its cash resources to these efforts, and it is unlikely to use any windfall from its 87%-held Zimplats subsidiary to pay dividends to shareholders.
Asked about the maiden R850m dividend payment Implats will receive from Zimplats, the largest platinum group metals miner in Zimbabwe, CEO Nico Muller said it would send the wrong message to investors for Implats to start paying dividends now.
The cash from Zimplats has not featured in Implats’s thinking and budgeting for the restructuring process, the completion of two new mines in the Rustenburg area or the studies into building a mine in the Waterberg, so it comes as a welcome sweetener, said Muller.
“I think the market will give us a rerating if they have confidence in [the] balance sheet and our ability to fund the restructuring. Once we’ve negotiated the strategic plan, the expectation for dividends will develop at that point,” he said.
Implats is about to close or sell five of its 11 shafts around Rustenburg and remove 13,000 positions from the Implats payroll over the next two years, incurring the ire of unions and the department of mineral resources. Implats is one of a number of platinum mining companies to undertake extensive restructuring to return its mines to profit after years of flat prices and strongly rising costs eroded margins. Lonmin is cutting 12,600 jobs and closing old mines over three years.
“We can’t lose the courage of our convictions, because Rustenburg in its current form has no economic future and no matter how much we are all wiping tears from our eyes, it is a company-threatening position if we don’t make dramatic changes to our business,” Muller said. Implats reported a deep dive into losses, notching up a R10.8bn net loss for the year to end-June, compared to an R8.1bn loss the year before, with a R13.6bn impairment taken primarily against its Rustenburg mines the driving cause.
As part of the efforts to save the Rustenburg mining complex, Implats is nearing completion of two new large mines that will form the core of production from the historical mining area, but these are likely to be the last big investments Implats makes there, he said.