Bauba Platinum's revenue up 14.1%
Bauba Platinum Limited released its provisional condensed consolidated results for the year ended 30 June 2018.
- Revenue R234,261 million (2017: R205,318 million). Up 14,1%
- Headline earnings per share 10,09 cents (2017: 14,71 cents). Down 31,4%
- 12-month offtake agreement concluded subsequent to year-end, with R73,500 million part-payment received
- Investment in tangible assets R72,908 million (2017: R11,602 million). Up 528,4%
- EBITDA R110,679 million (2017: R122,587 million). Down 9,7%
- CSI spend R7,838 million (2017: R3,066 million). Up 155,6%
Bauba has reported profit before tax for the year ended 30 June 2018 of R104,857 million (2017: R134,144 million) and profit attributable to equity holders of the parent of R38,248 million (2017: R55,756 million), resulting in diluted headline earnings per share of 10,02 cents (2017:14,65 cents).
This was primarily due to a weaker chrome ore market and a delay in excess of the timeframes stipulated by legislation for the Department of Water & Sanitation (DWS) to grant an application for an amended water use licence (WULA), which resulted in no opencast production for the months of May and June.
Bauba sold 204 494t (2017: 112 152t) of chrome ore at an average Cr2O3 grade of 38,72% (2017: 39,68%).
Operating cash flows before working capital changes of R107,075 million (2017: R140,909 million) were reinvested into the future profitability of the Moeijelijk Mine with an investment in property, plant and equipment and intangible assets of R75,101 million (2017: R12,474 million).
Consequently, no distribution has been declared.
At 30 June 2018 there was 37 200t of inventory on hand.
These investments in inventory and fixed assets are expected to help generate improved future performance through increased sales in a favourable market.
There was a weak start to the chrome ore market in the 2019 financial year with record inventory levels in Chinese ports, partly due to higher imports from South African producers and lower consumption in June, a consequence of environmental inspections. Further, market confidence was negatively impacted by the US - China "trade war".
Bauba has since received the above-mentioned WULA and re-commenced opencast production. The result of this will be reflected in the 2019 financial year.
The delay in the granting of Moeijelijk's Section 102 application with the Department of Mineral Resources (DMR) to amend its environmental programme (which is a prerequisite to operate the wash plant) has impacted the commissioning of Moeijelijk's wash plant. Bauba is of the view that this is only an administrative delay by the DMR, and the board is cautiously optimistic that the aforesaid authorisation may be granted shortly.
Once operational, this wash plant will enhance Bauba's profit margins and diversify its revenue streams away from the Chinese metallurgical market into less volatile chemical and foundry grade chrome ore concentrate markets.
The development of the underground operation at Moeijelijk is progressing well, with stable underground production to reach 30 000t per month of LG6 chrome ore run of mine (ROM) before the end of the first half of the 2019 financial year.
In spite of a weaker chrome ore market, Bauba is optimistic about the 2019 financial year considering the developments of the underground operation and the wash plant mentioned above, and that Bauba's business model and Moeijelijk's low cost of production ensures that Bauba is able to operate sustainably in a stressed chrome ore market, if need be.