Anglo American Platinum Limited ('Anglo American Platinum' or 'the Company') today reported results for the twelve months ended 31 December 2016.
Delivering change to build a resilient business and position the company for the future
- Key strategic success in repositioning the portfolio:
- Rustenburg Operations divestment completed, with R1.5 billion upfront proceeds received
- Sales and purchase agreement (SPA) signed for sale of mineral resources to Northam
- SPA signed for sale of Pandora stake to Lonmin
- SPA signed for sale of Union and Masa Chrome operations to Siyanda (post year-end)
- Operational improvements at all mines, with record production from Mogalakwena
- Unit cost increase of 1.4%, below South African CPI, with strict cost discipline mitigating mining inflation
- Delivered R700 million overhead cost reduction, with full run rate of R1 billion achieved in Q4 2016
- Generated R3.5 billion free cash flow from operations
- Reduced net debt by R5.5 billion to R7.3 billion
Anglo American Platinum today reported results for the twelve months ended 31 December 2016.
Market conditions during the year remained weak with the average dollar basket price per platinum ounce down 8% to $1,753 from $1,905 in 2015. This was driven by the decrease in prices for all metals produced, except gold and iridium. Net sales revenue however rose 4% to R62.0 billion (2015: R59.8 billion), primarily due to the weakening of the Rand/Dollar exchange rate.
Total platinum production for the year was at the top end of market guidance at 2.38 million ounces and all retained operations delivered production increases. In particular, production at Mogalakwena increased 5% to a record 412,000 platinum ounces whilst Amandelbult delivered its best performance since 2008 with 467,000 platinum ounces produced. Amandelbult also successfully commissioned the new chrome plant during the year, generating R320 million in additional operating cash flow and effectively recovering its capital costs within six months.
The strong operating performance is further reflected in the tight control of unit costs, up only 1.4%, versus CPI of 6.4%, contributing to a total of R3.5 billion of operating free cash flow being generated and all operations were cash positive. The cash generated from operations, working capital reductions and the proceeds from the sale of the Rustenburg operations, completed on 1 November 2016, were the primary contributors to the R5.5 billion reduction in net debt to R7.3 billion.
Further progress in the repositioning of the portfolio was achieved with the SPA’s signed to divest of: resources within the Amandelbult mining right to Northam; Anglo American Platinum’s 42.5% stake in the Pandora joint venture to Lonmin; and Union mine and Masa Chrome to Siyanda announced post year-end.
Earnings for the year benefitted from the improvements in performance at all mines, overhead reductions and the higher rand basket price, and despite the abnormally high stock gain in 2015, EBITDA increased 5% to R9.1billion.
Headline earnings recovered from a restated loss of R0.1bn in 2015 to a profit of R1.9bn and headline earnings per share (HEPS) were 713cps (Restated 2015 HEPS: -48cps) with underlying HEPS (excluding impairments, restructuring costs and stock gains) increasing from 364cps to 784cps.
CEO Chris Griffith commented: ‘The business has made significant strides in the last twelve months, despite the continued weak price environment for platinum group metals. Ongoing operational improvements, progress with divestments and a further reduction in net debt are ensuring that we build a resilient business and position the company for the future. 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.”
Discover more information in our Annual Results Booklet.