Posted: ’28-AUG-06 06:23′ GMT – – Archive

MINEWEB: Well, Keith Rumble joins us now. He is the CEO of Impala Platinum. Pretty good results coming out – sales revenue up 40% to R17.5bn on higher metal prices, operating profit up 73%. Keith, let’s start with Zimplats, though, before we get on to the results of the South African operations. You said this morning that you see it as the group’s largest growth opportunity. How big do you see Zimplats becoming in the group?

KEITH RUMBLE: Well, Geoff, the contained metal in the ground there is 90m or 95m ounces of platinum. So if we had to grow that from its current level of, let’s say, 100 000 ounces to 1m ounces, we’ve got 90 years of supply. That’s our aspiration – to grow it into a million-ounce producer, which is the same scale as our Rustenburg operations, and that’s very feasible.

MINEWEB: You struck a deal with Government whereby basically it gets part of your claim and you get security of tenure. You haven’t received that yet, though?

KEITH RUMBLE: No, we have, we actually received written confirmation from them today that the special mining-lease provisions that determine how you manage the resources have come through. And all of the fiscal and foreign-exchange provisions have now been incorporated into our enlarged lease. So they have delivered on their part of the bargain.

MINEWEB: And what do you have to deliver in return?

KEITH RUMBLE: We had to hand back about a third of our resources.


KEITH RUMBLE: And those were resources we would not have exploited for many, many years into the future.

MINEWEB: Now you are planning to spend $258m on the expansion programme at Zimplats. You must be pretty confident that this agreement’s going to last and that Zimbabwe as a country is going to become – or remain as stable as it is now. What are your feelings?

KEITH RUMBLE: Well it helps to run a business that is a hard-currency-determined business. So we’re not really open to the vagaries of the local currency effects there, but we’ve had nothing but a good experience in Zimbabwe. We’ve been in there for five years now, we’ve invested steadily. They haven’t tampered with any of the provisions in our mining licences. We’ve done, I think, a pragmatic deal to unlock value for our shareholders, to give us the confidence to go forward with exploiting the resource. It is the lowest technical risk resource around. And from that perspective we think it’s a good place to be.

MINEWEB: Production was relatively flat. Sales volumes were up on the higher prices. How sustainable are these prices?

KEITH RUMBLE: How sustainable are the prices? Well, the fundamentals for the metals are still extremely robust. You’ve got strong demand coming through for platinum, mainly out of the diesel automotive sector. And that’s a European story, where the European market penetration of diesels is taking off, and I think it’s going to spill over into the USA as fuel economy becomes a bigger issue around the world with these high fuel prices. For palladium, that’s also pretty good in that palladium goes into gasoline vehicles, and that has increased in percentage terms mainly because of increasing emission control standards around the world. And then rhodium is the other third-biggest metal, and that is also used for emission-control purposes for so-called NOx, which is the smog that you see around the big cities around the world. It’s the only metal that can do the job in controlling that. So the fundamentals are extremely solid. Jewellery is the swing factor. Platinum has sort of fallen out of bed as metal prices have increased but, palladium has come to the party. And it was necessary to give up some platinum out of the jewellery sector to support the industrial demand. So it’s a very good elasticity that we see coming through in the industry. So fundamentals very strong and we don’t see too much downside for prices.

MINEWEB: Moving on from that, you built Two Rivers with ARM. Are there any other opportunities in South Africa? Your growth, you say it’s coming from Zimbabwe – are there any other mines that can be built in South Africa?

KEITH RUMBLE: There certainly are. A case in point there is that our Marula operation, which is still ramping up, has a second phase attached to that. We’re only exploiting the UG2 reef at the moment, and we can exploit the Marensky reef in the fullness of time. We’re doing a feasibility on that. And the same holds for Two Rivers. The Marensky reef is still out there to be exploited. And then there are some of the junior properties that are being prospected as we speak, and they might hold some interest to us.

MINEWEB: The just explain how the reefs work. There are two – the Marensky and the UG2 overlay each other, one higher grade or higher grades than the other. How exactly does it work? What sort of percentage mix are you using?

KEITH RUMBLE: Well, in a mature operation like Rustenburg we actually exploit both. And we exploit it at sort of 55% Marensky and 45% UG2.

MINEWEB: Which is the …

KEITH RUMBLE: The Marensky is the preferred reef that has nickel and copper associated with it, and it’s actually easier to process and a slightly higher grade. So, from that perspective that’s the Rolls Royce.

MINEWEB: There was also a R159m tax charge – there seems to be a quibble over that. Why is SARS wanting this money, and where does the problem come in?

KEITH RUMBLE: That relates to a tax issue pertaining to the deal that we did with the Royal Bafokeng seven or eight years ago, whereby we took a tax deduction on an up-front payment which was treated as capital at that point in time, and they’re disputing that. So that’s an issue.


WAYNE MCCURRIE: Keith, obviously the outlook is extremely good for platinum prices going forward, as you mention, in demand and supply. But given the higher interest rates in the US and possibly worldwide as well, do you think we could have, let’s say, a two- or three-year pause in the overall bull market and maybe some fall in the dollar price? Not just platinum, but resources, commodities in general.

KEITH RUMBLE: I think each commodity has its own unique set of circumstances. If you look at the base metals, they’re really been driven by the China and India factor coming through. There’s been an underinvestment in capacity in that’s sector for the longest time now, and I think we’re seeing incremental demand coming on an already stretched pipeline. so I think failing a major downturn in those two economies. I think for base metals the outlook is still pretty positive. For precious metals and in particular the PGMs, there the demand has really been driven by legislative effects, emission control legislations, and those are still tightening progressively into the future. There’s another round of more stringent regulations coming through in 2010. Going to be positive for demand again.

MINEWEB: Keith, on a more personal note, you are leaving Impala. Have you got any plans yet as to what’s going to happen when you do leave?

KEITH RUMBLE: Well, I’m not going speeding off into the sunset in my Ferrari. But no, I haven’t got any plans, my intention was always to take a couple of months off. A lot of opportunities out there in the resources sector. Some of them are very interesting – and who knows where I’ll pop up.

MINEWEB: That was Keith Rumble Impala Platinum CEO.

Here is more articles you might like: