Impala Platinum leaps 12% after returning to profit

Impala Platinum’s share price surged to a 14-month high on Monday after the company said it had returned to profitability in the first half of its financial year.

 The world's second-largest platinum producer was given a  boost by the price of  platinum group metals palladium and rhodium surging to multiyear highs as global demand outstrips supply.

The company's improved financial performance, however, has not altered plans to slash 13,000 jobs and close  five of its 11 mines within two years.

Impala said it expected to report on February 28 that its headline earnings per share for the six months to end-December would be at least R2.92, a recovery from the matching period’s 21c headline loss per share.

The number was significantly above market expectations, with the consensus for full-year  headline earnings per share of R1.88, said Anchor Capital investment analyst Seleho Tsatsi.

Though no details had been given, the company had also presumably registered a solid performance in terms of cost-containment, said Tsatsi.

“Judging by these numbers, the Rustenburg restructuring looks to be well under way,” he said.

Production of refined platinum in the first half of its 2019 financial year rose 10% to 800,000oz from 727,000oz in the matching period when furnace maintenance hit output.

Platinum sales volumes were expected to rise 19% to 773,000oz from 649,000oz, the trading update said.

The improvement in safety at the company's Rustenburg operationshad clearly led to better production, said Noah Capital Markets mining analyst Rene Hochreiter.

Despite high platinum and rhodium prices, Implats is concerned that demand for platinum over the next three years will be soft. Platinum’s sister metals are expected to continue to be in high demand for emissions-reducing technology in automobile engines.

Key markets were also expected to tighten emissions regulations in coming years, Implats said in its 2018 financial results.