ANGLO American Platinum (Amplats) revealed on Monday just how crippling R14bn in write-downs and R850m in restructuring costs were to its financial performance last year, pushing the miner into a deep loss.
Although Amplats told the market last month the write-downs in its mines and investments, and restructuring costs would reduce basic and headline earnings at least 20%, Monday’s update was far in excess of this number.
Basic earnings are now forecast to be up to 2,055% lower and headline earnings would fall 92% below those for the previous year. Amplats, which is 80%-owned by Anglo American, said it would report a basic loss for the year to end-December of between R12.1bn and R12.2bn, compared with earnings of R624m in 2014.
Headline earnings, which strip out exceptional items, were forecast at between R60m and R135m, as much as 92% below last year’s R786m.
An analyst, speaking on condition of anonymity, said it appeared Amplats was “throwing the kitchen sink” at its impairments and write-offs, giving the firm a base from which to post a “good 2016”.
The company is forging ahead with the sale of its three big Rustenburg mines and two concentrators to Sibanye Gold for at least R4.5bn.
“Selling the marginal stuff will make a big difference to their numbers and they even get some cash for this,” said the analyst. “I think Amplats is being positioned for outperformance in 2016.”
The sale of the Union mine appears to have foundered and it has not yet disposed of its 49% stake in Atlatsa Resources’ Bokoni mines.
The analyst said there appeared to be no buyers with the cash Amplats wanted for these interests.
Contributing to falling earnings was an R850m payment for retrenchments of 2,720 people including 420 managers and senior staff from Twickenham, Rustenburg, Union and other mines in the group.
Amplats has said it has written off its shareholdings in Atlatsa and Bokoni and a loan extended to Atlatsa.
It impaired its stakes in Royal Bafokeng Platinum and the Bafokeng Rasimone Platinum Mine, as well as its own Rustenburg, Tumela and Twickenham mines.