Our opinion on the current state of AMS

Anglo American Platinum (AMS), or Amplats, is the second largest platinum producing company in the world (after Sibanye), producing a large portion of the world's platinum. It is owned 77,62% by Anglo American. Amplats was one of the first platinum mining companies in South Africa to move away from expensive deep-level mining towards shallower, more mechanised mining. The company has reduced the number of mines it is operating from 18 to 7 over the past 5 years, decreased overheads by 50% and its number of employees by 50%. This shift is now paying handsome dividends. The Mogalakwena open-cast operation is a palladium-rich operation with costs in the lowest quartile in the platinum group metals (PGM) industry world-wide. A new project at Mogalakwena will see platinum production up by 250 000 ounces and palladium production up by 270 000 ounces. Amplats also recently bought out Glencore's 40,2% stake in their joint venture Mototolo mine and the adjacent Der Brochen property for R1,5bn. Mototolo is a highly mechanised shallow mine which can be extended into Der Brochen without putting in new surface infrastructure. The platinum price is plagued by an effective re-cycling industry which produces about 2 million ounces a year by recovering from old auto catalysts. We believe AMS is the best of the PGM shares on the JSE - but it remains a commodity share and thus volatile and unpredictable. As part of its plans to boost production at Mogalakwena, the company has plans to relocate 1000 families of its employees which could result in unrest. On 10th December 2021 the company announced a R3,9bn extension to the life of its Mototolo/De Brochen mines to beyond 30 years. In its results for the six months to 30th June 2023 the company reported revenue down 24% and headline earnings per share (HEPS) down 71%. The rand price of PGMs was down 15% and the US dollar price fell by 29%. The company said, "Total PGM production from own-managed mines and owned volume from joint operations decreased by 8%, primarily due to expected lower grade at Mogalakwena". In a production report for the 3 months to 30th September 2023 the company reported PGM production down 2% and sales volumes up 2%. The company said, "Guidance for 2023 - Metal-in-concentrate PGM production and refined production guidance for 2023 is unchanged at 3.6-4.0 million ounces. Unit cost per PGM ounce produced is anticipated to be at the upper end of the range of R16,800 - R17,800 per PGM ounce produced". Technically, the share has been falling since March 2022. This mainly due to the challenges faced by the industry including loadshedding and the falling prices that they are getting for their production. As and when the world economy moves into recession, the demand for auto catalysts will decline and the price of PGMs will continue to fall. On 15th September 2022 Business Day reported that the Zimbabwean government was attempting to garnish $24m from Amplats in a dispute over royalties at its Unki mine. Amplats is contesting the garnishee order. On 15th February 2023 the company announced that CEO, Natascha Viljoen, would resign but would serve out her 12 month notice period. This share is a speculation on the international prices of the platinum groups metals that it produces.