Impala Platinum reported an excellent set of interim results on Thursday. Headline earnings were up 328% over the comparable prior 6 months. Revenue increased by 107% on the back of strong 6E PGM prices which were up 71% for the period.
The primary driver of PGM price growth was record rhodium prices, while higher average palladium prices also contributed materially.
Tons milled from Impala-controlled operations increased by 14%, the growth primarily coming from the acquisition of Impala Canada. Refined 6E production increased by 29% to 1.69 million ounces. There were zero fatalities reported over the period.
Free cash flow generated was R20bn which allowed Impala to pay a dividend of R10 per share (54% payout) - and Impala also paid back long-term debt and went into a strong net cash position on their balance sheet.
Impala guided for increased productions volumes over the next 6 months. That, together with the recent rally in the platinum price (which has helped push SA 6E PGM prices to record highs), should add further tailwinds to an already strong financial year.
Deficits in the rhodium and palladium markets should keep prices strong, while platinum’s recent rally is very positive for SA PGM miners. Impala has a high exposure to platinum, so at the margin this year should see record earnings coming from Impala.
Impala is trading on a rolling earnings multiple of 8x with a 6% dividend yield. The share is still looking attractively priced despite the strong rally over the last couple of years. If current PGM prices remain buoyed, shareholders should see an even stronger second half of the year.