Anglo American Platinum : Interim Report for the six months ended 30 June 2017

Anglo American Platinum: Further progress in creating a resilient and sustainable business

Anglo American Platinum Limited ('Anglo American Platinum' or 'the Company') today reported interim results for the six months ended 30 June 2017.

The actions taken to improve operational performance, along with the repositioning of the portfolio to create a resilient business for the current weak platinum group metals' (PGM) pricing environment, have continued to deliver positive results during the period, with the Company strengthening its balance sheet by generating R4.3bn in underlying operating cash flow and reducing net debt to R5.9 billion from R7.3 billion at the end of 2016.

Total PGM production was up 4% to 2.43 million ounces (H1 2016: 2.34 million ounces) and total platinum production (both mined metal in concentrate and purchase of concentrate) increased 3% to 1.19 million ounces (H1 2016: 1.15 million ounces), with Mogalakwena achieving record production. Unit costs of R19,970/platinum ounce were up 3%.

Financial performance for the period was negatively impacted by both the significantly stronger Rand and lower PGM sales volumes. Due to the Rand strength, the Rand basket price for the metals we sell weakened 3% to R24,400/platinum ounce compared to R25,100/platinum ounce in H1 2016. This is despite the more favourable dollar basket price of USD 1,843 (H1 2016: USD 1,632). Sales volumes were impacted owing to the planned rebuild of the Waterval smelter furnace 2 and a high pressure water leak at the converter plant (ACP), which delayed some refined production from H1.

EBIT of R2.0bn (H1 2016: R3.1bn) was accordingly impacted by lower net sales revenues, which decreased by 11% to R27.3 billion, and higher losses from associates, mainly Bokoni and Pandora. The Company recorded attributable post-tax impairments of R2.2 billion, of which R0.3 billion impacted headline earnings such that headline earnings were R0.7 billion versus R1.6 billion, and headline earnings per share were 285 cents (393 cents on a normalised basis if excluding the once off impairments) compared with the restated 629 cents in H1 2016.

The sales of Union mine, Anglo American Platinum's share of the Pandora JV, and the long-dated mineral resources at Amandelbult are progressing and are targeted to complete in H2 2017. The Company will provide support to Atlatsa Resources, our managing joint venture partner, when they commence the process of placing the Bokoni mine on care and maintenance.

Chris Griffith, Chief Executive Officer, said 'Our mining operational performance has generally been solid in the first half of 2017 and, with the Waterval furnace planned rebuild complete and the converter operating at steady state, we expect to refine the majority of metal in process during the second half of the year. I am particularly pleased that we have been able to further strengthen our balance sheet, despite the weaker Rand basket prices in the period. It remains our view that prices are likely to remain subdued in the near term and consequently we will continue to manage the business for this low price environment, whilst positioning ourselves for the future'.

Outlook

Platinum production (metal-in-concentrate) is expected to remain within guidance of 2.35-2.40 million platinum ounces and refined production guidance is between 2.45 to 2.50 million ounces for 2017. Unit cost guidance remains between R20,350 and R20,850 per platinum ounce (M&C). The Company reiterates that the decrease in capitalised waste costs at Mogalakwena will add around R400 per ounce to unit costs for 2017. Capital expenditure guidance for the year remains between R3.7 billion to R4.2 billion, excluding capitalised waste stripping, which will be around R0.8 billion for the year.

Download the 2017 Interim Report for the six months ended 30 June 2017