S Africa's Angloplats To Stay Out Of Forward Selling
By Angus Macmillan
Of DOW JONES NEWSWIRES
JOHANNESBURG (Dow Jones)--Anglo American Platinum Corp. (O.AAP), the world's
biggest platinum producer, will maintain its policy of not getting heavily
involved in forward selling or currency hedging, Executive Chairman Barry
Davison said Tuesday.
At a presentation following the release of the group's results for the 12
months to Dec. 31, 2001, he said the group has no forward selling or hedging
positions "apart from a small position in palladium."
Earlier Tuesday, AngloPlats, as it is known, announced a record net profit
of 8.02 billion rand ($1=ZAR11.505), driven by increased output of platinum,
palladium and rhodium, and the weakness of the rand against the dollar.
It said it is on target to produce 2.35 million ounces of platinum group
metals in 2003, and 3.5 million ounces a year by 2006.
While Davison said the group may gear its balance sheet to partially fund
its expansion projects, he said it wouldn't go higher than a debt:equity ratio
of 15%.
The group had a cash balance of ZAR5.8 billion at the end of 2001, but its
board has approved expansion expenditure of ZAR9.6 billion towards reaching
the target of 3.5 million ounces a year by 2006.
Financial Director Roeland van Kerckhoven said he didn't expect the weak
rand to underpin earnings to the same extent in 2002 as it had done in 2001.
The rand shed more than 40% of its value against the dollar in 2001, most of
the slide occurring in the final three months when it sank from ZAR8.60 to an
all-time low of ZAR13.85 before recovering to current levels.
Equally, the weak rand shouldn't impact heavily on group overheads as
non-rand costs are just 5% of total costs.
"Our cash flows will remain strong in 2002, but our expansion projects will
be cash hungry," van Kerckhoven said.
He estimated that ongoing capital expenditure will soak up ZAR1.7 billion in
2002, while expansion projects will require ZAR3.5 billion.
Commenting on the global platinum market, Davison said he expects platinum
demand to continue to grow by 4%-5% a year.
Asked whether companies such as AngloPlats may soon be subjected to state
royalties as a result of new mining legislation being drafted in South Africa,
he said: "Maybe in the longer term. I don't see anything like this happening
in the short to medium term. Perhaps in the longer term, which is 10 years
plus."
Draft mining legislation was discussed by South Africa's legislators last
year, but a new policy hasn't yet been formulated.
Focusing on operational issues, the group said its move toward mechanized
mining was gaining pace. Mechanized mining accounted for 8% of output in 2001,
and is expected to account for 15% this year.
On the subject of HIV-Aids, Chief Operating Officer Dorien Emmett estimated
an infection rate of between 8% and 24% for AngloPlats' 42,000 employees and
contract laborers
"Where our workers live with their families, the rate is low. But it is much
higher among our migrant laborers," he said.
Rival South African platinum group metals producer Impala Platinum Holdings
Ltd. (O.IM) recently said the HIV infection rate for its staff was 16%.
Looking to the future, AngloPlats' executive team said operational focus
would continue to be on cost containment and improved efficiencies.
While it wouldn't be drawn into comment on whether major shareholder Anglo
American PLC (AAUK) might increase its 53% holding in the group, the team said
share buyback authorization is still in place.
Last year, AngloPlats bought back 1.8% of its own shares, effectively
raising Anglo American's ownership of the group from around 51%.
-By Angus Macmillan, Dow Jones Newswires; angus.macmillan@dowjones.com
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