Ghost Bites (Alphamin | Anglo American Platinum | Impala Platinum x Royal Bafokeng Platinum | South32 | Wesizwe Platinum)

Alphamin: production and EBITDA down (JSE: APH)

Tin pricing moved against the company in the past quarter

In Alphamin’s quarterly update, the company compares the numbers for the three months ended June against the three months ended March i.e. a quarter-on-quarter basis. That’s different to most companies that take the year-on-year approach. In reality, most entrepreneurial management teams are more worried about cadence (this approach) than the year-on-year approach that we find in financial markets.

The company processed 3% more ore but the grade deteriorated, so tin production was actually 1% lower. Sales were 3% lower and the average tin price was also 3% lower, so the combination was a nasty 14% decrease in EBITDA. This is despite all-in sustaining cost being flat for the quarter (i.e. similar to the preceding quarter).

Tin prices have moved higher since the end of the quarter, which bodes well for the next set of numbers. Another important point is that delayed sales should also clear during the next quarter.

Development at Mpama South is ongoing, with no issues noted and an expectation for the project to be completed within budget. That’s always an encouraging sign!

Alphamin’s cash on hand is $41.4 million and an interim dividend of $29 million has been declared. This works out to 40.3707 ZAR cents per share.

85% drop in the Anglo American Platinum dividend (JSE: AMS)

Exposure to a single commodity is risky

The mining industry has diversified players (like Anglo American or Glencore or South32) and mining houses focused on specific commodities, like Kumba Iron Ore or the star of this painful update, Anglo American Platinum.

When pricing goes the wrong way, like a 15% drop in the rand basket price of PGMs in this interim period, it’s unhelpful. When production challenges hit at the same time, like a drop in refined production of 13%, it’s disastrous.

A 24% decrease in revenue is never going to be a happy start to an income statement, with adjusted EBITDA down 69% and HEPS down by 71%.

It gets even worse by the time you reach the dividend, which is down 85% to R12 per share.

Despite this, return on capital employed was 30%. That’s a long way down from the astonishing 150% in the comparable period, but it remains a decent number overall.

Here’s a share price chart of the past five years, obviously excluding dividends:

Impala Platinum is taking Royal Bafokeng Platinum private (JSE: IMP | JSE: RBP)

The saga is finally over

After a long and extraordinarily painful process, Impala Platinum (Implats) has finally tasted success on the Royal Bafokeng Platinum (RB Plats) deal. With the results of the offer now in, Implats holds 98.35% of RB Plats’ issued shares.

This allows Implats to invoke section 124(4) of the Companies Act, which is a squeeze out provision that applies where an offer has been accepted by at least 90% of the holders of the shares in question. In such a case, the offeror (Implats) can force the remaining shareholders to sell on the same terms. This has the same effect as a scheme of arrangement (i.e. is binding on everyone) but is a different route to get there.

There was no guarantee of RB Plats being delisted in this process. With such a high acceptance rate for the offer, the delisting is now on the table along with the squeeze out.

Another JSE listing is outta here.

South32 finishes the year with a strong quarter (JSE: S32)

Production was up across the board in Q4’23, with year-on-year numbers less appealing

Full-year production numbers at South32 are a mixed bag, with increases in aluminium, copper and manganese. There were decreases in alumina, silver, lead, zinc, nickel and metallurgical coal. This is despite a strong fourth quarter, where production increased sequentially across every commodity. The year-on-year picture isn’t quite as good for the final quarter, but most commodities were higher.

Commodity prices fell in the 2023 financial year following record conditions for many commodities in the base period. The best performing commodity in terms of pricing was molybdenum. I also had to Google what that is, so don’t feel bad! Molybdenum is used in making steel alloys.

The biggest drops in price were seen in zinc, nickel and aluminium, all of which fell 20% or more.

The Taylor deposit has suffered a non-cash impairment of $1.3 billion based on delays from Covid, significant dewatering requirements and current inflationary pressures. This is part of the Hermosa project, which now has a carrying value of $1 billion. $428 million is attributable to the Taylor deposit and $519 million to the Clark deposit.

Labour unrest hits Wesizwe Platinum (JSE: WEZ)

This is exactly what our economy doesn’t need at the moment

An environment of rampant food inflation and high interest rates creates a recipe for social unrest. Although we haven’t seen anything major since the Sibanye gold strike, Hulamin recently had to deal with a NUMSA strike and now Wesizwe Platinum is dealing with something more worrying: an unprotected strike.

The Bakubung Platinum Mine has been closed as a result of the strike, with safety concerns as the obvious issue. Let’s hope the issues can be resolved soon.

Little Bites:

• Director dealings:
  • Senior executives at Investec (JSE: INL) sold shares worth R10.4 million
  • Directors of Vunani (JSE: VUN) bought shares worth R300k
  • A director of Schroder REIT (JSE: SCD) bought shares worth £7.7k
  • The CEO of Spear REIT (JSE: SEA) continues to buy shares for his family, this time to the value of R21.4k
  • A director of Mantengu Mining (JSE: MTU) bought shares worth R6k

• The odd-lots offer by CA Sales Holdings (JSE: CAA) resulted in the company repurchasing 0.02% of shares in issue for R706k. That sounds like practically nothing, yet it reduces the number of shareholders by 35% and comes with an administrative cost saving.

• The CFO of Tiger Brands (JSE: TBS), Deepa Sita, has resigned to move to Australia. The effective date is 31 December and a replacement hasn’t been named as of yet.

• Novus (JSE: NVS) announced that the group CFO (Keshree Alwar) will move into the CEO role at Maskew Miller Learning, now that the acquisition has been completed. A new CFO (Craig Wright) has been announced as an internal appointment from the Novus Print side of the business.

• Legacy cash shell Trencor (JSE: TRE) released a trading statement for the six months to June. HEPS will be 64.8 cents vs. a headline loss of 0.3 cents per share in the comparable period.

• Choppies (JSE: CHP) confirmed that after the recent rights offer, Ivygrove Holdings now has a 12.4% stake in the company.

• Corporate disaster Afristrat (JSE: ATI) announced that the recent creditor application for a liquidation against the company has been withdrawn, pending the outcome of the shareholder liquidation application for which judgement was reserved in court. Talk about a rock and a hard place.

INVEST IN SHARES