Anglo American Platinum Restructuring Bears Fruit -- Update
February 15 2017 - 4:33AM
Dow Jones News
By Alexandra Wexler
JOHANNESBURG--Anglo American Platinum Ltd. (AMS.JO), the world's
top producer of the precious metal, said Wednesday it returned to
profit in 2016 as years of restructuring and assets sales began to
pay off.
The Johannesburg-listed miner reported net profit of 632 million
South African rand ($48.3 million) for the year, up from a loss of
ZAR12.36 billion in 2015 and in line with the company's previously
announced guidance. Amplats, a majority-owned unit of globally
diversified miner Anglo American PLC (AAL.LN), reported headline
earnings, which strip out certain items, of ZAR1.87 billion for
2016, up from a loss of ZAR126 million during the previous year,
also in line with the company's previously announced guidance.
Earnings in 2015 were hurt by impairments and write-offs of
ZAR14 billion after tax and by restructuring costs. The company
continued to be hit by lower U.S. dollar metal prices during 2016,
while a weaker rand and cost improvement initiatives across the
company helped to offset those pressures.
Amplats announced in a separate statement Wednesday that it has
agreed to sell its 85% interest in its Union Mine and its 50.1%
interest in Masa Chrome Co. to a subsidiary of black-owned mining
company Siyanda Resources Proprietary Ltd. for an initial purchase
price of ZAR400 million in cash, as well as a deferred
consideration. The deferred consideration has a cap of ZAR6 billion
over 10 years, the company said.
The remaining 15% of Union Mine is owned by the
Bakgatla-Ba-Kgafela traditional community. The Masa Chrome plant is
a joint venture with Siyanda Resources. Amplats said it intends to
use the proceeds to reduce its debt.
At Dec. 31, the company's net debt was ZAR7.32 billion, down 43%
over the previous 12 months. Proceeds from the sale of Amplats'
Rustenburg operations to Sibanye Gold Ltd., completed on Nov. 1,
were the primary contributors to reduction in net debt, the company
said.
Still, the company's average U.S. dollar basket price per
platinum ounce sold fell 8% in 2016 to $1,753 from the previous
year.
"The business has made significant strides in the last 12
months, despite the continued weak price environment for platinum
group metals," said Chief Executive Chris Griffith. "The
challenging global macroeconomic outlook is likely to prevail
through at least 2017. We will continue to manage the business
accordingly, positioning ourselves for the future by combining
operational and capital discipline with investment in developing
the market for platinum group metals."
Amplats shares on the Johannesburg Stock Exchange were recently
down 1.2% at 335.24 rand but are up 27% this year, on the back of
higher platinum prices. Futures for the white metal are up 10%
year-to-date on the New York Mercantile Exchange's Comex
division.
Still, Amplats booked impairments of ZAR283 million post tax in
the second half of 2016 related to its Bokoni and Pandora mines.
Amplats, like other South African platinum producers, has been
hammered by labor issues and low prices, which have driven away
investment.
Refined platinum production at the company fell 5.3% to 2.33
million ounces in 2016, while total platinum production rose 1.7%
to 2.38 million ounces from the previous year. Net revenue was
ZAR61.96 billion for the year, up 3.6% from 2015.
(Razak Musah Baba contributed to this article.)
-Write to Alexandra Wexler at alexandra.wexler@wsj.com
(END) Dow Jones Newswires
February 15, 2017 04:18 ET (09:18 GMT)
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