Royal Bafokeng Platinum (RBPlat) said on Wednesday the extended battle for control of its assets by two larger rival companies is limiting its capacity to execute its growth plans, with some key personnel opting to leave due to uncertainty.
For more than a year, Impala Platinum (Implats) and Northam Platinum have been in hot pursuit of RBPlat, coveted for its vast, shallow reserves of platinum group metals (PGMs), which are expected to thrive in a cleaner, more environmentally friendly world.
“The uncertainty caused by the delay in finalising the corporate action is what has become a key risk to managing our people, their morale and retention,” RBPlat CEO Steve Phiri said on Wednesday in the presentation of the 2022 financial results.
“We are unable to formulate a long-term strategy and implement aspects of our current strategy, which includes growth. Our capital allocation abilities are constrained.”
The target company said the bidding war could drag on well into the latter part of 2023, bringing more uncertainty, which is already taking its toll on its employees and suppliers and potentially causing instability in the business.
Implats owns about 40.71% of RBPlat and Northam’s share stands at about 34.52%. The Public Investment Corporation (PIC) is the potential kingmaker with a shareholding of 9% and is set to decide soon which of the two bidders it will back.
The PIC is the biggest shareholder in Implats and Northam, with 20% and 17%, respectively.
A week ago, Implats CEO Nico Muller voiced frustration at the many delays the group faced in the acquisition process. But, he said, Implats was still “very serious to get to a position of control” over RBPlat.
Implats has been pursuing RBPlat for more than a decade, seeing an opportunity to own low-cost, mechanised shafts, and to extend the life of its own ageing deep-level operations in Rustenburg.
The move by Northam underlines CEO Paul Dunne’s strategy to boost its output of platinum, which is used in electrolysers to make hydrogen fuel cells to power cars, trains and ships.
RBPlat reported a 48% drop in headline earnings per share to R12.03 in the year to December. Big rivals have also reported a drop in profits over the same period, though these came off a very high base in 2021 when many PGM companies reported record profits.
Group revenue slipped 3.1% to R15,91bn, mainly due to lower production. PGM output fell 4% to 449,000 ounces as a result of stoppages at its Styldrift mine after a fatality in September.
Average PGM prices tended weaker in the reporting period but were cushioned by a softer rand. RBPlat said prices could remain volatile in the months ahead amid uncertainty about the supply-demand dynamics.
Like many companies in SA the group has to contend with debilitating power cuts, which hamper production and increase costs. Phiri said plans were afoot to introduce renewable energy into its energy mix.
“The country’s current energy crisis, our need to reduce our carbon footprint and to reduce our reliance on Eskom makes it more urgent that we introduce renewable energy in our operations. The bankable feasibility study for the construction of a modular solar PV plant, which would introduce renewable energy into our energy mix, will be completed in the third quarter of 2023, depending on the receipt of regulatory approval,” Phiri said.
Dividend
“The environmental impact assessment process was finalised in February 2023, with the submission of the final report to the authorities.”
The company declared a final dividend of R5.35 a share, equating to R1.5bn. This is in addition to the R711m interim dividend declared last August.
The share price was marginally higher at R146.50 at the close on the JSE, but down 13% over a one-year rolling basis, according to Infront data.
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