Total platinum group of metals (PGM) production at Unki Mine for the half year to June 30, 2023 rose by a marginal 2 percent to 121,500 ounces compared to 119,600 ounces recorded in the prior year comparable period due to improved concentrator recovery and higher throughput but partly offset by a lower built-up head grade.
According to parent company – Anglo American Platinum, platinum and palladium rose 2 percent each to 55,600 ounces and 46,900 ounces respectively.
Further growth was offset by an 11 percent decline to 59,000 ounces recorded during the second quarter period against the prior period, which had an adverse impact on the group’s overall performance.
The second quarter decrease was due to the decreased production to mining through planned higher internal waste areas as both platinum and palladium went down 8 percent and 11 percent respectively.
In terms of financial performance for the half year period, cash operating costs rose 14 percent to US$125 million on the back of an 18 percent increase in development and an 8 percent increase in square metres mined, above-CPI inflationary cost increases, most notably in electricity, explosives and chemicals.
The US dollar cash unit cost increased by 12 percent over the first half of 2022 to US$1,027 per PGM ounce. Rand cash operating costs per PGM ounce were 32 percent higher at R18,596 compared to R14,083 recorded during the same period last year due to the devaluation of the rand to the US dollar.
Unki’s earnings before interest, tax, depreciation and amortisation (EBITDA) for the period was R1,2 billion compared to R1,9 billion during the same period last year.
The mine delivered an EBITDA margin of 31 percent from 42 percent in the comparable prior year while return on capital employed (ROCE) was 24 percent from 62 percent due to a 48 percent increase in average capital employed following the completion of the concentrator debottlenecking project.
Overall, Anglo’s total PGM production from own-managed mines and owned volume from joint operations decreased by 8 percent to 1,198,700 ounces primarily due to the expected lower grades at Mogalakwena, 2022 infrastructure closures, poor ground conditions and short-term operational challenges at Amandelbult and the ramp-down of Kroondal, marginally offset by increased production from Mototolo and Unki.
The group had a challenging half year period.
“In H1 2023, Anglo American Platinum navigated a challenging operating environment that was charactered by increasing global macro-economic headwinds, operational challenges, intensified Eskom load curtailments, and significantly lower dollar metal basket prices,” said Anglo.
EBITDA for the period was R13,4 billion, a decline from R42,8 billion in the comparable prior year period resulting in a mining EBITDA margin of 42 percent from 59 percent.
This was due to a 29 percent decrease in the PGM dollar basket price and 12 percent lower sales volumes (excluding trading) on the back of lower refined production, primarily due to planned asset integrity work at the processing operations, 8 percent lower metal-in-concentrate from own mined volumes, the impact of Eskom load shedding.
EBITDA was also negatively impacted by higher mining and processing costs and the lower valuation of purchase of concentrate (POC) inventory due to lower PGM prices, which resulted in a negative POC margin.
Headline earnings totaled R7,9 billion, with headline earnings per share (HEPS) of R30 per share compared to R101 per share during the same period last year.
According to Anglo, the company’s balance sheet remains strong, with net cash of R23,9 billion, after paying the H2 2022 dividend of R9 billion, and R3,4 billion in H1 2023 taxes and royalties.
In terms of prices, PGM prices were mostly weaker in H1 2023, as a mixed macro-economic backdrop was overlaid with metals-specific negative factors. The PGM average realised basket price was $1,885 per ounce, 29 percent lower than in the same period in 2022.