THE impact of surging platinum group metal (PGM) prices was for all to see in Impala Platinum’s (Implats’) year-end numbers, which it capped with a special final dividend of R8.7bn (R9.55/share).
Including a base dividend of R4.4bn (R4.90/share), Implats’ final payout was R13.1bn, taking the total payout for the financial year ended June to R16.8bn – or 82% of adjusted free cash flow. Implats’ revised dividend policy is to pay a 30% base dividend from adjusted free cash before capex, with discretion to approve an additional ordinary dividend.
UBS described the dividend as an “incremental positive” as it keep ahead of its expectations. “This provides further evidence that excess balance-sheet capacity may be returned to shareholders,” said the bank’s platinum analyst Steve Friedman. At a ratio of 0.73x of earnings per share, the total dividend as the highest of Implats’ peers.
Platinum and rhodium prices were 79% and 75% higher respectively, and despite a narrowing of deficits in platinum and palladium for the remainder of the calendar year, Implats expects prices to hold up.
“While uncertainty has become a defining feature of the macroeconomic landscape, the constructive medium-term outlook for PGMs continues to provide impetus,” it said in commentary to its year-end numbers.
At 3.55 million ounces, refined and saleable production was 5% higher for the 12 months ended June. Implats has targeted production of between 3.3 and 3.5 million oz for the current 2027 financial year, despite losing an estimated 60,000 ounces in a recent one-week safety-related shutdown at Implats’ Rustenburg operations.
While the final payout was handsome, Implats still left just under R10bn on the balance sheet in gross cash after generating R22bn in free cash flow. On a net basis, Implats ended the year with cash of R20bn prior to the final dividend. For the coming year, capex is expected to increase to between R9bn and R11bn from R7.2bn in 2026.
Shares in Implats gained just under 6% in mid-morning Johannesburg trade taking gains over 12 months to 26%, but lower than peers Northam (+36%) and Valterra (+46%). Shares in PGM stocks are all down so far this year, however, following a correction in the basket price off January peaks.
However, analysts think the PGM market remains in good shape, partly owing to its investment appeal. Despite redemptions in ETFs this year, platinum and palladium, along with silver, have correlated with gold. In the case of platinum, the correlation is almost perfect (0.95), according to the World Platinum Investment Council last month.
“Both metals (gold and platinum) have very different fundamentals, users, and supply-and-demand dynamics, but they’ve followed the same gold price for a short period, which they arguably shouldn’t,” said Johan Theron, spokesman for Implats. “It just tells you there’s a particularly strong macro, monetary, global force acting on metals right now.”
