Precious Metals

Implats Open to Acquiring Low-cost Assets to Counteract Profit Struggles

Precious Metals

Implats reported that it is exploring the option of purchasing low-cost assets as a way to increase both output and profits.

Impala Platinum Holdings (Implats) (JSE:IMP) has begun looking at the option of acquiring low-cost assets as it seeks to look beyond closing unprofitable shafts in South Africa in order to boost output and profits.

The platinum miner, which is the second-largest producer of the precious metal in the world, is debating the shift in an attempt to catch up to its largest rival, Anglo American Platinum (JSE:AMS), which had been successful with its transition to acquiring low-cost assets.

“There remains an opportunity for larger-scale consolidation,” Nicolaas Muller told Bloomberg.

“If something appears on our radar screen, we will not be closed to it,” he added.

Muller also noted that the company would be able to return to profit sometime in 2020 by shutting older shafts at its Rustenburg mining complex. Closing that shaft would give the miner the opportunity to pursue growth.

Furthering Implats nudge towards obtaining lower-cost assets is the fact that the miner does not believe that platinum prices will rebound anytime before 2022.

As Implats’ forms new strategies, the company revealed that it may jointly develop adjoining deposits to minimize costs. This would include assets in South Africa’s palladium-rich Waterberg region, where one of its properties borders Ivanhoe Mines’ (TSX:IVN) Ivanplats operation.

“Consolidation across the boundaries is definitely an opportunity for us and for our neighbors,” Muller noted.

The CEO also explained that tight supply will continue to bolster palladium and rhodium prices, which will inevitably provide a buffer for South African platinum producers. Projected supply deficits for palladium amid strong demand from automakers will increase price pressures “unless there is a switch back to platinum,” he concluded.

As of 1:04 p.m. EST on Tuesday (December 4), Implats was down 1.06 percent, trading at ZAC 3,350.00. Meanwhile, platinum was down 0.37 percent, trading at US$802.00 per ounce as of 2:05 p.m. EST.

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.

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