Financial results centre

Valterra Platinum CEO Craig Miller and finance director Sayurie Naidoo will host a virtual and in-person investor and media presentation following the release of its interim results on Monday, 22 July 2024. The presentation is scheduled for 11:00 SAST. To view the webcast, please click here. For more information in the interim, please contact [email protected] (media) or [email protected] (investors and analysts).

Highlights

• Stringent safety measures implemented to prevent recurrence of two tragic fatalities and improve safety
• Refined PGM production up 5% in H1 2024 to 1.78 million ounces compared to the prior period, while metal-in-concentrate down 5% to 1.76 million ounces
• Sales volumes increased 9%, due to draw down of inventory
• R12.3 billion EBITDA, down 8% on the prior period, despite a 24% decline in realised PGM dollar basket prices to $1,442, inflation and once-off restructuring costs, which were partially offset by cost reductions and higher sales
• On track to meet R10 billion capital expenditure and cost out target for 2024, with ~R4.7 billion of savings in H1 2024, of which ~R2.9 billion were operating costs and ~R1.8 billion stay in business capital
• Achieved an all-in sustaining cost (AISC) of $957 per 3E ounce, well ahead of the 2024 target of below ~$1,050; on track to sustain cash generation through a low PGM price cycle
• Restructuring progressing at pace, with statutory employee consultation complete and Mortimer Smelter on care and maintenance from end of April 2024
• Strong net cash position of R14.5 billion, including the customer prepayment
• Interim dividend of R2.6 billion, or R9.75 per share, equivalent to 40% payout of headline earnings in line with capital allocation framework

2023 Interim Results

Valterra Platinum delivers sound financial results against a backdrop of weaker PGM prices

Key features:

Commitment to zero harm:

• Continued initiatives to improve safety, with no fatalities for the period.
• Achieved a record low total recordable case frequency rate (per million hours) of 1.58.

Strong progress on ESG; focus on public-private partnerships and collaborations to support infrastructure delivery:

• We continue to support initiatives and working groups within South Africa’s National Energy Crisis Committee (NECOM) to focus on the expedited implementation of the Presidential Energy Action Plan.
• The Olifants Management Model Public-Private Partnership to implement a ‘source-to-tap’ water solution to deliver significant value for our operations and host communities.

Total platinum group metals (PGM) production decreased by 7%; full-year guidance maintained:

• Mogalakwena’s production was impacted by the expected lower grade and the unplanned maintenance shut at the Baobab plant, though this was mitigated by higher run-time and reliability at the North concentrator.
• Amandelbult’s production was affected by 2022 mining area and infrastructure closures, poor ground conditions at Dishaba and short-term operational challenges at Tumela.
• Mototolo and Unki maintained stable production for the period.
• Refined production (excluding toll refining) declined 13% to 1.7 million PGM ounces.

Load curtailment:

• Impacted concentrators and smelters, which resulted in an increased work-in-progress inventory of c.66,400 PGM ounces.

Declining PGM basket price:

• PGM prices were weaker in the first half of 2023, driven by an uncertain macro-economic environment and specific PGM market factors.
• The average realised PGM dollar basket price decreased by 29% in the period to $1,885 per PGM ounce.

EBITDA of R13 billion and a solid EBITDA mining margin of 42%.

Unit cost performance of R18,076 per PGM ounce. Full-year unit cost guidance of between R16,800 and R17,800 maintained.

Return on capital employed of 30%.

Maintained capital discipline and returns to shareholders in H1 2023:

• Stay-in-business capital investment focused on asset reliability to ensure safe, stable and capable operations.
• Base dividend of R3 billion, or R12 per share, based on a payout ratio of 40% of headline earnings.

2022 Interim Results

• Relentless focus on keeping our people and communities safe to mitigate the effects of ongoing market disruptions and deliver operational performance – tragically we lost one colleague in the 2nd quarter 2022 from the ACP following a slip-and-fall incident in November 2021, and one colleague from our independently managed Modikwa operation.
• Progress on our ESG journey:
  • Protecting lives and livelihoods of employees and communities through our recovery and reconstruction programmes;
  • Concluded a ground-breaking five-year wage agreement with unions and our employees;
  • Implementation of Social Labour Plans and progressing livelihood initiatives; and
  • Launched the nuGen^TM hydrogen fuel-cell haul truck, key to our decarbonisation progress.
• R71 billion economic contribution to society including:
  • R6.8 billion in salaries and wages;
  • Increased local procurement to R15.3 billion, including R1.1 billion on doorstep community procurement;
  • Community development spend and dividend pay-outs to community trusts of R350 million;
  • Significant contribution to the fiscus, with R9.5 billion paid in taxes and royalties;
  • R6.1 billion of capital invested into the business; and
  • R33.1 billion in dividends paid to shareholders.
• Total platinum group metals (PGMs) production decreased by 4%, improvements expected in H2:
  • Mogalakwena impacted by headwinds in H1. Growing confidence through higher-grade mining areas, increased truck fleet, improved P101 operational performance in mining and greater runtime at North Concentrator sets the mine up for a stronger H2.
  • Amandelbult maintained production, despite infrastructure closures at Tumela at the end of 2021.
  • Mototolo and Unki saw significant increases in production following the successful integration of the concentrator debottlenecking projects.
• Robust PGM basket price –$2,671 per PGM ounce, the second-highest on record as a result of strong underlying fundamentals for PGMs.
• Build-up in work-in-progress inventory from ACP largely released and processed in 2021, one year ahead of schedule – H1 2022 therefore shows more normalised refined production and sales volumes, and EBITDA generation.
• EBITDA of R43 billion, a 32% decrease due largely to exceptional built-up sales volumes in H1 2021, and strong EBITDA mining margin of 59%.
• Unit cost performance of R14,600 per PGM ounce, in line with expectations.
• Return on capital employed of 150%.
• Maintaining capital discipline and returns to shareholders in H1 2022:
  • Stay-in-business capital investment focused on asset reliability to ensure stability.
  • Base dividend of R10.9 billion or R41 per share, based on a pay-out ratio of 40% of headline earnings.
  • Special dividend declared of R10.6 billion, or R40 per share.
  • Total cash dividend declared of R21.5 billion or R81 per share, equating to an 80% pay-out ratio of headline earnings.
• Evaluating opportunities for growth and progressing the Future of Mogalakwena studies.

2021 Interim Results

• Committed to zero harm
  • No work-related fatalities in the first half of 2021
• Covid-19 continues to impact on safety and productivity, and significant efforts are ongoing to keep employees healthy and safe
• Significant economic contribution to stakeholders of R39.2 billion, including:
  • R16.6 billion paid to the fiscus through taxes and royalties;
  • Continuing to protect livelihoods for all employees, including vulnerable employees not yet back at work, with R5.5 billion paid in salaries and wages;
  • Increased procurement from local and doorstep community suppliers of R2.2 billion;
  • Invested R5.2 billion on capital projects;
  • Community development initiatives spend of R300 million; and
  • Paid R9.4 billion in dividends in respect of the second half of 2020.
• Progress on ESG:
  • Protecting employees and communities during the Covid-19 pandemic;
  • Facilitating the Covid-19 vaccination rollout around operations in South Africa and Zimbabwe;
  • Progressing renewable energy and hydrogen options at Mogalakwena;
  • Ranking as the overall ESG leader in the Platinum and Precious Metals sector by FTSE Russell; and
  • Implementation of Social and Labour Plans and progressing education initiatives.
• Total PGM production up 28%, with a solid production performance from all own-managed mines
• Refined production up 128%, with the Anglo Converter Plant (ACP) performing ahead of plan
• Strong financial performance reported, underpinned by a 29% increase in the PGM basket price to R41,400 per ounce sold (H1 2020: R32,166)
• Record EBITDA of R63.3 billion, a 385% increase
• Return on capital employed increased to 207% (H1 2020: 48%)
• Net cash position of R57.6 billion (including the customer prepayment)
• Industry-leading returns to shareholders with an interim dividend declared of R175 per share, or R46.4 billion.
• Community share schemes to receive approximately R245 million in respect of H1 2021 dividends.

2020 Interim Results

• Fatality-free at managed operations, marking 620 consecutive fatality-free days to 30 June 2020
• Dedicated to the health and wellbeing of our employees and communities during the Covid-19 pandemic
  • R1.2 billion paid to employees not working during lockdown to ensure all employees receive their full salaries and benefits
  • R250 million invested in Covid-19 measures, including R55 million on community initiatives with various programmes benefiting over 1 million people
• PGM production impacted by national lockdowns in South Africa and Zimbabwe – c.585,000 ounces lost in H1 2020
• Refined PGM production affected by the temporary shutdowns of the ACP for repairs and Eskom power outages that occurred in the first quarter
• Robust prices supporting a solid financial performance
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) of R13.1 billion (H1 2019: R12.4 billion)
  • A healthy balance sheet, with net cash of R11.3 billion (H1 2019: R6 billion)
  • Liquidity headroom of R16.6 billion (excluding customer prepayment)
• Board declared a dividend for H1 2020 of R2.8 billion, or R10.23 per share, based on a 40% pay-out ratio of headline earnings
• A stronger performance is expected in H2 2020, although significant headwinds and risks still exist, including the Covid-19 pandemic impacts, the repair of ACP Phase A, and potential for Eskom power outages

2019 Interim Results

• Zero fatalities at own managed operations
• Strong environmental, social and governance (ESG) credentials – achieving global recognition, placing first in Sustainalytics’ ranking of the precious metals sector (of 55 peers)
• Continued commitment to delivering industry leading returns to shareholders
  • Interim dividend declared of R3 billion or R11.00 per share
• Quality earnings, with EBITDA up 82% to R12.4bn
• Headline earnings per share up 120% to R28.15 per share
• Free cash flow from operations increased by 126% to R4.3 billion
• Strong balance sheet – net cash position of R6.0 billion
• Return on capital employed (ROCE) increased to 45%
• Continued focus and strategy for the next phase of value delivery

2018 Interim Results

• Focus on elimination of fatalities – seeing improvements in overall safety performance
• Commitment to industry leading returns to shareholders
  • EBITDA growth of 70% to R6.8 billion
  • Return on capital employed (ROCE) increased from 9% to 22% (annualised)
  • Interim dividend declared of R1.0bn for H1 2018
• Strong operational performance – produced Platinum Group Metals (PGMs) production up 4%
• Rigorous cost control – unit costs down 3%
• Moved to net cash of R0.5bn from R1.8bn net debt as at 31 December 2017
• Simplified and enhanced the portfolio further
• Continued strategy to deliver next phase of value:
  • Acquisition of Glencore’s 39% interest in Mototolo JV
  • Grow the market for PGMs – together with the PIC committed US$200m to AP Ventures
  • Extract the next phase of value at existing operations through global best practice operating methods and modernisation
  • Continued project studies to determine best value growth options at Mogalakwena and Der Brochen

2017 Interim Results

DELIVERING CHANGE, BUILDING A RESILIENT BUSINESS AND POSITIONING FOR THE FUTURE

• Managing the business for the current environment
  • Continuing to drive operational improvements
  • Early restructuring actions paying off but still more to do
  • Pricing environment remains subdued
• Record platinum production from high-margin Mogalakwena - up 9%
• Refined production expected to increase in H2 2017 - full year guidance of 2.45 to 2.50 million platinum ounces
• Further deleveraging of the balance sheet despite the current low price environment
• Delivering on our value not volume driven strategy
  • Progressing disposals of Union, Pandora and long-dated Amandelbult resources
  • Supporting Atlatsa Resources to place Bokoni on care and maintenance
  • Disciplined capital allcoation, focussed on short payback, value accretive projects

2016 Interim Results

Valterra Platinum, delivering on strategy and managing the business for the current pricing environment

Valterra Platinum Limited reported interim results for the six months ended 30 June 2016. Net sales revenue increased by 3% to R30.7 billion, EBIT increased 12 per cent to R1.5 billion, after normalising for the stock gains of R2.2 billion in H1 2015 and R0.6 billion in H1 2016 and net debt reduced by R2.9 billion to R9.9 billion. Headline earnings were R1.0 billion and headline earnings per share were R3.99

PGM pricing during the period remained weak, with the average US Dollar basket price per platinum ounce sold decreasing by 24% in H1 2016 to US$1,632, versus the US$2,157 achieved in 2015. The decline in US Dollar metal prices was partly offset by a weaker Rand resulting in the Rand basket price per platinum ounce ending 3% weaker at R25,100, compared to R25,748 in H1 2015.

Within this pricing environment, the Company continued to make progress in implementing its value driven strategy and improving its operational performance. Since 2013, the Company has reduced unprofitable platinum production by ~350koz. R1.0 billion of overhead cost savings have been identified through the reduction of 400 managerial roles and non-labour overhead savings, and R400 million of this has been achieved in H1 2016. The Company’s cash operating costs of R17.8 billion increased by 5%, below the level of mining inflation, and unit costs of R19,436 per platinum ounce increased by 1.8% over R19,095 achieved in H1 2015.

Interim Results 2015

Valterra Platinum reported strong performance in the context of commodity price pressure for the six months ended 30 June 2015.

Despite a steep decline in the dollar prices for most metals, the financial performance of the Company improved significantly over the comparative period in 2014, which was impacted by the five month long industrial action. Headline earnings increased to R2.5 billion from R157 million in the first half of 2014 and headline earnings per share were 936 cents per share compared to 164 cents per share.

Net sales revenue increased 7% to R29.9 billion (2014: R27.8 billion) due primarily to increased sales volume, up 11% to 1.16Moz, and the impact of the weakening Rand/ US dollar exchange rate.

The operational improvements and cash control initiatives introduced over the last two years resulted in all of the asset complexes in the portfolio being cash positive, and net debt declined R1.9 billion from the December 2014 close of R14.6 billion.