Zimbabwe: Unki Earnings Rise

Platinum producer, Unki Platinum Mine's earnings before interest, tax, depreciation and amortisation (EBITDA) rose 15 percent to R488 million ($310 million using Monday's interbank rate) in the half year to June 30 2019, after achieving record production in platinum group of metals (PGMs).

This led to a growth in EBITDA margin of 27 percent, which was flat on the prior year when excluding the once-off benefit in the same period in the prior year of the sale of Treasury bills.

Unki's record PGMs production volumes helped boost the overall parent company -- Anglo American Platinum's growth in total production for the half year period under review.

At R229 million, economic free cash flow was 9 percent above prior year comparative period's figure of R211 million when excluding the once-off benefit of Treasury Bills worth R100 million in H1, 2018.

Return on capital employed increased to 12 percent from 8 percent in the same period last year. Cash operating cost per platinum ounce rose 9 percent to R25 594 from R23 477 in the first half of last year.

"The mine, being a dollar denominated operation, was impacted by the weakening of the rand to dollar exchange rate which on average decreased 15 percent to R14,26 from R12,38," said Anglo.

In terms of production, Unki achieved a record PGM production of 95 800 ounces for the six months under review, representing a 3 percent growth on same period in the prior year.

The increase was on the back of improved underground mining efficiencies, as well as improved concentrator throughput, mill run-time and higher recoveries.

Platinum production grew 2 percent to 42 500 ounces compared to 41 400 recorded in the same period last year.

Unki produced 37 900 ounces of palladium during the half year period, which was 5 percent above comparable period production figures of 36 200 ounces.

Anglo has indicated the group will continue to monitor Unki operations relative to the macro-economic developments and their impact on the business.

During the period under review, key economic developments that unfolded include the removal of the multi-currency system as well as the introduction of an interbank foreign exchange market with the official rate moving from 1:1 against the US dollar to just over 6:1 by June 30, 2019.

At group level, Anglo enjoyed a strong performance for the six months under review, with increased earnings, returns and operating cash flows, benefiting from strong market fundamentals which saw the US dollar platinum basket price increase 16 percent, and coupled with a weakening rand, led to the ZAR platinum basket price increasing by 33 percent year-on-year.

Net sales revenue increased by 28 percent to R42,9 billion from R33,5 billion in H1 2018. Revenue, excluding sales of purchased metals and tolling, increased by 21 percent as a result of a 33 percent increase in the rand basket price to R38 305 per platinum ounce sold.

EBITDA increased by 82 percent to R12,4 billion from R6,8 billion in H1 2018, driven by higher US dollar metal prices and the weaker rand/US dollar exchange rate contributing R3,6 billion and R3,3 billion respectively, partially offset by CPI and higher royalties of R0,9 billion combined.

For the 2019 financial year, production is guided to be lower than 2018 levels on the back of the transition of Sibanye-Stillwater Rustenburg mine 4E material to a tolling arrangement.

"PGM production outlook for 2019 is maintained at between 4,2 million to 4,5 million ounces, including platinum production of between 2 million to 2,1 million ounces and palladium production guidance of between 1,3 million and 1,4 million ounces.

"As previously communicated, production guidance is down on 2018,"said Anglo.

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