Materiality and the reporting boundary

OUR OPERATIONS ARE VERY DIFFERENT AND ARE THEREFORE EVALUATED INTERNALLY ON AN INDIVIDUAL BASIS TO UNDERSTAND AND MANAGE THE GROUP. WHERE APPLICABLE, INFORMATION HAS BEEN GIVEN ON A PER OPERATION BASIS TO ADDRESS INDIVIDUAL OPERATIONS’ STAKEHOLDER MATERIAL MATTERS.

In line with good reporting practice, the content of our integrated and sustainable development reports is based on a materiality assessment. For the purposes of this report, items have only been taken into account and reported on, if the effects of these items have materially impacted strategy, the business model, capitals, governance, performance and prospects of the Group and its stakeholders. This is in accordance with the international framework and the materiality background paper for integrated reporting.


Materiality determination process

/ Our performance / Chief executive’s review

Nico Muller
chief executive officer

Delivering strategy

OUR BUSINESS FOCUS ENSURES THE SUCCESSFUL DELIVERY OF OUR STRATEGY, THE MATERIAL CHANGES TO THE ENVIRONMENT IN WHICH IMPLATS CONDUCTS ITS BUSINESS, AS WELL AS OBSERVATIONS BY KEY STAKEHOLDERS, IDENTIFYING KEY PRIORITY AREAS TO SUPPORT THIS.

Turnaround Impala Rustenburg

FY2018   FY2019
  • Year-on-year circa R1 billion saving
  • Reduced 2 200 employees
  • Closed 4 shafts
 
  • Strategic review concluded
  • 300 of 1 500 earmarked positions reduced (as at end August 2018)

Decisive Marula strategy

  • Reduced community disruptions
  • 25% year-on-year increase in Pt ounces
  • Cash flow before working capital and finance activities improved from negative R839 million in the previous year to R77 million positive in FY2018
  • Well positioned to benefit from higher future palladium and rhodium prices

Capital allocation and cash management

  • Group headroom of R6.2 billion (cash R3.7 billion and undrawn facilities of R2.5 billion)
  • Secured R2.0 billion facility to allow forward pipeline sales
  • R829 million dividend from Zimplats
  • Ongoing review of optimal capital structure

Maintain social licence to operate

  • Improved safety performance – significant reduction in fatalities in H2 FY2018
  • Active stakeholder engagement
    • Impala restructuring
    • Zimplats – sustain licence to operate
    • Stable community relations
  • No level 4 or 5 environmental incidents
  • TB/HIV rates well below national average

Develop strategic agility

  • Impala Rustenburg strategic review – will reduce exposure to high cost deep level conventional mining
  • Waterberg – increased bias towards low cost, shallow mechanised palladium-rich assets
  • Exciting new Zimbabwe strategy

Increased organisational effectiveness

  • Key executive appointments – Meroonisha Kerber, CFO and Mark Munroe, CE: Impala Rustenburg
  • Remuneration policy updated – STI and LTI structures aligned to shareholder expectations
  • Performance management framework rolled out to all management employees

/ About our business / Where we operate

South Africa

operations

Impala

Ownership

  • 96%-owned
  • 4% employee share ownership trust

Impala has operations on the western limb of the world-renowned Bushveld Complex near Rustenburg in South Africa. This operation comprises a 10-shaft mining complex and concentrating and smelting plants. The base and precious metal refineries are situated in Springs, east of Johannesburg.

580 800oz
Refined Pt production
Impala
0.071
FIFR
6
Fatalities
14.04
TIFR
39.6%
Contribution to Group platinum production
6.54
LTIFR
>15 years
Life-of-mine
870m
Average current depth
40 079
Number of employees

IRS

Ownership

  • 100%-owned

Impala Refining Services is a dedicated vehicle to house the toll refining, metal concentrate and matte purchases built up by Implats. IRS provides smelting and refining services through offtake agreements with Group companies (except Impala) and third parties. IRS is situated in Springs, east of Johannesburg.

Marula

Ownership

  • 73%-owned
  • 27% Tubatse Platinum (Pty) Ltd, Mmakau Mining (Pty) Ltd, Marula Community Trust

Marula is one of the first operations developed on the relatively under-exploited eastern limb of the Bushveld Complex in South Africa. Marula is located in the Limpopo province, some 50 kilometres north-west of Burgersfort.

85 100oz
Pt in concentrate
Impala
0.121
FIFR
1
Fatalities
24.18
TIFR
5.2%
Contribution to Group platinum production
11.63
LTIFR
>15 years
Life-of-mine
300m
Average current depth
3 988
Number of employees

Two Rivers*

Ownership

  • Implats (46%)
  • African Rainbow Minerals (54%)

Two Rivers is a joint venture and is situated on the southern part of the eastern limb of the Bushveld Igneous Complex some 35 kilometres south-east of Burgersfort in Mpumalanga, South Africa.

165 500oz
Pt in concentrate
Impala
Nil
FIFR
0
Fatalities
4.65
TIFR
11.1%
Contribution to Group platinum production
2.15
LTIFR
>20 years
Life-of-mine

*Non-managed

400m
Average current depth


Zimbabwe

operations

Zimplats

Ownership

  • 87%-owned
  • 4% employee share ownership trust

Zimplats’ operations are situated on the Zimbabwean Great Dyke south-west of Harare. Zimplats operates four underground mines and a concentrator at Ngezi. The Selous Metallurgical Complex (SMC), located some 77 kilometres north of the underground operations, comprises a concentrator and a smelter.

270 800oz
Pt in concentrate
(including concentrate sold)
Impala
nil
FIFR
0
Fatalities
0.52
TIFR
18.1%
Contribution to Group platinum production
0.19
LTIFR
>30 years
Life-of-mine
240m
Average current depth
6 445
Number of employees

 

Mimosa*

Ownership

  • Implats (50%)
  • Sibanye-Stillwater (50%)

Mimosa is jointly held by Implats and Sibanye-Stillwater. Its operations are located on the Wedza Geological Complex on the Zimbabwean Great Dyke, 150 kilometres east of Bulawayo. The operation comprises a shallow underground mine, accessed by a decline shaft, and a concentrator.

125 000oz
Pt in concentrate
Impala
nil
FIFR
0
Fatalities
0.93
TIFR
7.9%
Contribution to Group platinum production
0.22
LTIFR
>15 years
Life-of-mine
180m
Average current depth
* Non-managed

 

 

Africa-map

Implats is a leading Producer of platinum And associated platinum Group metals (PGMs)

Total Implats
1 468 100oz
Refined Pt production
0.065
FIFR

12.857
TIFR

0.065
LTIFR

7#
Fatalities

50 512
Number of employees

AFPLATS

Ownership

  • Ba-Mogopa Platinum Investments (Pty) Ltd (26%)

/ About our business/ Commitment to good governance and assurance

TTHE IMPLATS BOARD IS COMMITTED TO PROVIDING ETHICAL AND EFFECTIVE LEADERSHIP TO THE GROUP. THE BOARD FULLY EMBRACES THE PRINCIPLE OF ETHICAL LEADERSHIP IN SETTING AND IMPLEMENTING THE STRATEGY AND THE GROUP’S APPROACH TO GOVERNANCE, GUIDED BY THE PRINCIPLES OF THE KING IV CODE ON CORPORATE GOVERNANCE (KING IV).

CHAIRMAN’S STATEMENT ON CORPORATE GOVERNANCE

It is vital we maintain the highest standards of good governance to promote quality decision-making and the execution of those decisions within a disciplined framework of policies, procedures and authorities. This is even more important in challenging times. Good governance exists in an environment where roles and responsibilities are clearly defined, forums are conducive to robust debate and performance is regularly reviewed. We outline our progress and describe our governance efforts over the next few pages.

The Implats board is committed to providing effective leadership to the Group. The Implats board embraces the principles of ethical leadership in setting and implementing Implats’ strategy and is guided by the principles of the King IV Code on Corporate GovernanceTM* (King IV), the Companies Act, 2008, the JSE Listings Requirements and all other applicable laws, standards and codes. A compliance schedule can be found at www.implats.co.za.

The Implats board exercises independent judgement on all issues reserved for its review and approval, while simultaneously considering the needs of all stakeholders, and takes full responsibility for the management, direction and performance of the Group.

To ensure we make and execute good decisions, which are transparently in the interest of Implats, its shareholders and other stakeholders, the Implats board works continuously to maintain and develop its governance framework.

Dr Mandla SV Gantsho
Chairman framework.

* Copyright and trademarks are owned by the Institute of Directors in Southern Africa NPC and all of its rights are reserved.

COMBINED ASSURANCE GUIDE

/ Our performance / Group performance against objectives

Implats is a focused PGM producer and supplier. Our strategy seeks to sustain optimal levels of production at the lowest possible cost from a diverse and competitive asset portfolio. We seek to position the Company in the lower half of the industry cost curve, and as the industry safety leader, to benefit from future stronger PGM prices and to reward all our stakeholders

KPI OVERVIEW

Operational strategies
Performance target for FY2017
Performance against strategy and KPIs
Performance graphs*
Relentlessly drive the safety of our people
  • Zero fatalities
  • LTIFR <5.5
  • Regrettably, seven employee fatalities were recorded during the year
  • LTIFR improved 5.4% from the previous year to 6.01 per million man-hours (including contractors) (2017: 6.35)
  • Continue to drive zero harm through awareness and education, by implementing appropriate systems and best practice, and by working in partnership with employees and regulators
  • Our focus is on ensuring resilient and effective leadership and operational discipline to ensure compliance with safe production practices
graph
Consistently deliver production targets
  • Refined platinum production of 1.57 – 1.61Moz
  • Refined platinum production of 1.47 million ounces
  • Strong mining performances at Impala Rustenburg and Marula were supported by sustained excellent mining contributions from all other operations
  • Planned closures of 4, 7 and 7A Shafts at Impala Rustenburg
  • Furnace maintenance work during the first half of the year and an electrical failure at the furnace in February 2018 resulted in an inventory build over the year

 

graph
Improve efficiencies through operational excellence
  • Cost per platinum ounce <R23 100 and stock adjusted unit cost achieved of R22 931 (2017: R22 828)
  • Unit costs increased to R24 660 per platinum ounce refined impacted by the lower refined production volumes (2017: R22 657)
  • Completed and approved a strategic review of Impala Rustenburg that will transition this operation to long-term economic viability in a low-price environment
  • Continue to address inefficiencies and contain the rising input cost base at operations, particularly Impala Rustenburg
  • Enhanced focus on human resources, which includes the development of a high-performance culture and reviews of the organisational structure and remuneration policies to support this
graph
Cash conservation
  • Capital < R4.7 billion
  • Capital expenditure of R4.61 billion (2017: R3.43 billion)
  • Capital expenditure was in line with plan
  • R1.4 billion was spent on the two development shafts, 16 and 20
  • Key projects and their associated capital investment were re-evaluated during the year resulting in a reduction (R910 million) or deferment of capital spend in a low-price environment

 

graph
Maintain our licence to operate
  • Impala Rustenburg SO2 at <16tpd
  • Marula community disruptions <10 days
  • Build/sell >230 employee houses

 

  • SO2 emissions at Impala Rustenburg at 6379t (2017: 6 306t)
  • Direct SO2 emissions were within the conditions of the Air Emission Licence at Impala Rustenburg and Impala Springs
  • Built 136 employee houses in Rustenburg as expenditure was curbed due to cash preservation
  • Officially opened Sunrise View Secondary and both primary and secondary schools at Platinum Village
  • Group social development expenditure amounted to R214.10m (2017: R136.48m)
  • Resolved land dispute and secured mining tenure at Zimplats
graph