JOHANNESBURG – Anglo American Platinum (Amplats) surged almost 6percent after forecasting an 80percent leap in earnings for the six months to June on the back of the stronger platinum group metals (PGM) price.
The miner, which is valued at R220billion, closed 5.5percent higher on the JSE yesterday at R862.45 a share after attributing the significant earnings jump primarily to an increase in the rand PGM basket price.
Palladium and rhodium prices have lifted significantly since last year, helping local producers shrug off years of curtailment of capital investment that led to a jobs bloodbath.
Amplats, an Anglo American subsidiary, said headline earnings and headline earnings a share would be at least R2.69bn, or 1025cents, a share higher compared with the six months to the end of June 2018.
Headline earnings and headline earnings a share for the comparative period were R3.363bn and 1282c respectively. The miner said it expected basic earnings and basic earnings a share to be at least 180percent higher than the comparative period as a result of a higher PGM basket price and once-off impairments in 2018.
Basic earnings and earnings per share for the comparative period were R2.179bn and 831c respectively.
Seleho Tsatsi, an analyst at Anchor Capital, said the company was riding on a bullish tailwind for PGMs.
“Judging by the jump in the share price today, Amplats has exceeded market expectations,” Tsatsi said, adding that Amplats was the highest-ranked South African platinum producer in terms of its valuation.
“It trades at a premium compared to its rivals, Sibanye-Stillwater and Impala Platinum,” said Tsatsi.
South African-listed producers have performed strongly in the past eight months thanks to the leap prices coupled with the weaker rand.
Palladium, which is used mainly in emissions-reducing catalysts for vehicles, was $1507.50 (R21 604.50) an ounce yesterday, and it overtook gold for the first time in 16 years early in December 2018.
However, the platinum price, which was $818.80 an ounce yesterday, up 1.97percent from the previous day’s close, has underperformed gold and palladium for a fair amount of time.
In the six months to June 2018, Amplats reported improved operational efficiencies across the portfolio, with strong performances from the joint ventures.
It generated a 4percent increase in PGM production in the period, despite the closure of unprofitable production from Bokoni and Maseve mines.