Amplats lowers refined output guidance as ACP Phase B unit is shut for a full rebuild

The company in October reported that the ACP Phase B unit had been fragile and continued to experience instances of water leaks.

Amplats had temporarily reclosed the plant in June, after having reopened it in May, which followed an original closure of both the Phase B and Phase A units in March after an explosion at the plant.

The Phase A unit had also undergone repairs and was currently undergoing a rebuild, which was due to be completed before the end of the year.

Amplats explains that after having implemented increasing monitoring and controls to assess the ACP Phase B unit, further water leaks were discovered, with the company deciding it best to again shut down the unit and undertake more extensive repair work to avoid critical damage to the plant or injury to staff.

CEO Natascha Viljoen confirms that all long lead items for the ACP Phase B unit are already on site, while CFO Craig Miller says the company will update the market on the new cost estimate for the unit’s rebuild.

The rebuild of ACP Phase A had remained within its capital range of between R500-million and R600-million.

As at October 31, the company had refined 2.4-million PGM ounces.

The closure of the ACP Phase B unit until ACP Phase A unit is recommissioned will result in an increase in work-in-progress inventory, whose release will start once the ACP Phase A unit is operational.

As a result of the closure of the ACP Phase B unit, the company has lowered its refined production and sales guidance for the year to 2.5-million PGM ounces, compared with the previously targeted 3.1-million- to 3.3-million-ounce guidance.

Miller explains that the revised refined production will comprise of 1.1-million platinum ounces and 800 000 palladium ounces.

Amplats, at the start of the year, set its refined production guidance at between 4.3-million and 4.7-million ounces, before the initial ACP incident and before Covid-19 impacted on production.

Miller and Viljoen say the roughly 1.2-million ounces lost as a result of the ACP closures will be released to customers over the next 18 months, while the 521 600 oz of PGMs lost owing to Covid-19 amount to a real loss.

The company further advises that there is no change to other guidance, including metal-in-concentrate production, which remains at between 3.6-million and 3.8-million PGM ounces for the year.

Amplats affirms it has contingency plans in place and will be engaging with customers to minimise any disruption to contractual obligations.

As a result of the ACP’s lost production for the year, the company’s earnings before interest, taxes, depreciation and amortisation will be impacted by R5-billion to R6-billion, but Miller says it will be unwound over the next 18 months and that the loss was a timing issue rather than a loss.

Amplats had R28-billion of cash available at the end of October, as well as R25-billion of committed facilities, which puts the company in good liquidity shape.