February 28, 2012 / 6:44 AM / in 6 years

UPDATE 1-RBPlat sees challenging year ahead

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JOHANNESBURG, Feb 28 (Reuters) - Royal Bafokeng Platinum, a mid-tier producer of platinum group metals, on Tuesday reported 12.6 percent drop in earnings after it increased the number of shares in issue as part of its listing in Johannesburg last year.

Headline earnings per share of 167 cents were reported for the 12 months to end December from 191 cents the year before.

Headline earnings are the main profit gauge in South Africa, and strip out certain one-time items.

The weighted average number of shares in issue since its November listing are about 163.7 million, compared to just over 141.1 million the year before.

Production of platinum concentrate dipped 2.2 percent to 281,598 ounces as safety stoppages and a contractor strike contributed to a 4.2 percent decrease in tonnes milled.

The lower volumes and rising net costs, in particular the increases in labour and electricity costs, contributed to an 8.4 percent increase in cash costs to about 6,400 rand per platinum ounce respectively.

“Nobody in the sector would deny that it has been a difficult year, and we have experienced our fair share of those challenges,” said RBPlat Chief Executive Officer Steve Phiri.

Phiri anticipates that market conditions will remain difficult in the year ahead but he remains confident about the Styldrift 1 project in South Africa, which is scheduled to take off in late 2014.

This project is expected to more than double the group’s platinum production to 610,000 ounces a year by 2017.

RBPlat’s shares have gained 9.6 percent this year to date, outperforming Johannesburg’s All Share index, which is up 7.1 percent so far this year. (Reporting by Sherilee Lakmidas, editing by Ed Stoddard)

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