The axing of 520 employees and removal of others to more profitable areas drove Royal Bafokeng Platinum (RBPlat) costs down during its third quarter and lifted production, the company said on Thursday.
RBPlat started restructuring its operations in the first six months of the year and concluded the process in the September quarter.
The process entailed cutting 520 positions to bring down the fixed-cost base at its Bafokeng Rasimone Platinum Mine and shifting two-thirds of its mining crews working at the mine’s South shaft on the UG2 reef to mine the more profitable Merensky reef at the South and North shafts.
The cost of producing platinum fell 11%, to R14,535/oz.
Mined tonnage increased by 8% and recoveries of metals nudged higher, offsetting a small dip in the grade.
As a result, the company posted a 7% improvement in metal output, recording 89,300oz of the four platinum group metals, of which nearly 58,000oz were platinum.
Bloomberg reports that Investec analyst Nkateko Mathonsi upgraded RBPlat to a buy from a sell and raised the target price to R36, from R30. The consensus of analysts’ target price was R37.91, a 19% increase over the past three months.
RBPlat said its total capital expenditure for the quarter rose by R346m to R613m, compared with the matching period a year earlier as its work on the new Styldrift mine, where it has increased mining and construction activities, absorbed the most of that increased spend.
With R57m spent at Styldrift during the quarter, RBPlat has now invested R7.8bn on the new mine, which will focus on the sought-after Merensky reef.
The change in the reefs targeted meant the total contribution of the UG2 reef fell to just 18% of total tonnes milled.
The BRPM mine contributed 670,000 of the milled tonnes during the quarter, while Styldrift generated 155,000 tonnes for the quarter.
The share closed flat at R31.