Anglo American Platinum Restructuring Bears Fruit -- Update

By Alexandra Wexler

JOHANNESBURG--Anglo American Platinum Ltd. (AMS.JO), the world's top producer of the precious metal, said Wednesday it returned to profit in 2016 as years of restructuring and assets sales began to pay off.

The Johannesburg-listed miner reported net profit of 632 million South African rand ($48.3 million) for the year, up from a loss of ZAR12.36 billion in 2015 and in line with the company's previously announced guidance. Amplats, a majority-owned unit of globally diversified miner Anglo American PLC (AAL.LN), reported headline earnings, which strip out certain items, of ZAR1.87 billion for 2016, up from a loss of ZAR126 million during the previous year, also in line with the company's previously announced guidance.

Earnings in 2015 were hurt by impairments and write-offs of ZAR14 billion after tax and by restructuring costs. The company continued to be hit by lower U.S. dollar metal prices during 2016, while a weaker rand and cost improvement initiatives across the company helped to offset those pressures.

Amplats announced in a separate statement Wednesday that it has agreed to sell its 85% interest in its Union Mine and its 50.1% interest in Masa Chrome Co. to a subsidiary of black-owned mining company Siyanda Resources Proprietary Ltd. for an initial purchase price of ZAR400 million in cash, as well as a deferred consideration. The deferred consideration has a cap of ZAR6 billion over 10 years, the company said.

The remaining 15% of Union Mine is owned by the Bakgatla-Ba-Kgafela traditional community. The Masa Chrome plant is a joint venture with Siyanda Resources. Amplats said it intends to use the proceeds to reduce its debt.

At Dec. 31, the company's net debt was ZAR7.32 billion, down 43% over the previous 12 months. Proceeds from the sale of Amplats' Rustenburg operations to Sibanye Gold Ltd., completed on Nov. 1, were the primary contributors to reduction in net debt, the company said.

Still, the company's average U.S. dollar basket price per platinum ounce sold fell 8% in 2016 to $1,753 from the previous year.

"The business has made significant strides in the last 12 months, despite the continued weak price environment for platinum group metals," said Chief Executive Chris Griffith. "The challenging global macroeconomic outlook is likely to prevail through at least 2017. We will continue to manage the business accordingly, positioning ourselves for the future by combining operational and capital discipline with investment in developing the market for platinum group metals."

Amplats shares on the Johannesburg Stock Exchange were recently down 1.2% at 335.24 rand but are up 27% this year, on the back of higher platinum prices. Futures for the white metal are up 10% year-to-date on the New York Mercantile Exchange's Comex division.

Still, Amplats booked impairments of ZAR283 million post tax in the second half of 2016 related to its Bokoni and Pandora mines. Amplats, like other South African platinum producers, has been hammered by labor issues and low prices, which have driven away investment.

Refined platinum production at the company fell 5.3% to 2.33 million ounces in 2016, while total platinum production rose 1.7% to 2.38 million ounces from the previous year. Net revenue was ZAR61.96 billion for the year, up 3.6% from 2015.

(Razak Musah Baba contributed to this article.)

-Write to Alexandra Wexler at [e-mail]

(END) Dow Jones Newswires

February 15, 2017 04:18 ET (09:18 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.