[miningmx.com] – ROYAL Bafokeng Platinum (RBPlat) is something of a rarety in the current South African platinum sector. Its social relations are relatively good and its delivery on projects are under budget. It’s not typical of the sector in general.
“We can’t exclude the possibility of issues,’ says Martin Prinsloo, CFO of RBPlat, regarding the possibility of labour disputes on its mine, Bafokeng Rasimone Platinum Mine (BRPM). “But we have a wage agreement in place until June 2014 that provides miners with the opportunity to double their packages,’ he says.
This compares to the industry norm regarding recent wage/productivity agreements in which miners have 30% wage upside. The CEO, Steve Phiri, also sits with miners to hear the grievances.
Phiri told Miningmx of his sudden realisation, in the midst of last year’s labour strife on South Africa’s platinum mines, of just who vulnerable management was in those meetings. “You could see where the troublemakers were,’ says Phiri. Regular meetings continue. They are tense but constructive, says Prinsloo.
Of course, engagement of this kind is entirely possible at RBPlat because it manages a single mine. In fact, RBPlat makes the business case for one asset mining companies echoing the structure of South Africa’s gold mining companies in the Eighties – without the corporate excesses.
RBPlat has broken from shareholder Anglo American Platinum’s (Amplats’) procurement processes narrowing the group’s 123 system applications to just 68, said Prinsloo. Contracts have also been simplified down 100 pages to only 30 pages in an effort to make things simplier. “It’s no criticism of Amplats, but we just don’t need the same things,’ says Prinsloo.
There has been cost escalation – cash unit costs increased 19% in the year ended December, partly on lower production – but the company has banked R323m in project savings to date on its 600,000 ounce per year Styldrift 1, a project that could double production. It also saved R110m on the BRPM replacement programme.
Prinsloo says the company could yet ask shareholders for funds in 2014 for completion of the R11.3bn Styldrift project but given that only R1bn has been tapped means they’ll be tolerance of another request. “It can go from not required to whatever number,’ says Prinsloo.
Justin Froneman at SBG Securities thinks delivery on Styldrift remains the key to establishing the firm’s credentials as “an attractive tier 2 platinum asset’. For the current year, a drawndown on some R900m in cash reserves is likely. A R500m bank facility remains undrawn. Given the balance sheet stress of its peer group, this is a decent performance.
Macquarie Research also likes the share. “While the stock has come off somewhat in light of prevailing platinum price, it remains one of our preferred picks in the space given its growth in Merensky production,’ it said in a recent note.
