Royal Bafokeng Platinum is a mid-tier, black-owned platinum group metals (PGMs) producer committed to the management and development of the commercial assets of the Royal Bafokeng Nation in South Africa. The group’s history stems back to the formation of a joint venture between Anglo American Platinum and Royal Bafokeng Holdings in 1999. In 2010, Royal Bafokeng Platinum managed to purchase a 67% majority interest in the venture and took over operational control.

The group’s asset portfolio today includes shallow grade mines in the Rustenburg area of the North West. Existing operations include shafts on the Boschkoppie, Styldrift and Frischgewaagd farms, which have been identified as hosting the last undeveloped Merensky reef on the Western Limb of the Bushveld Complex. The company’s concentrator plant has a processing capacity of 200 000 tonnes of ore per month, producing around 180 000 platinum ounces per year.

The group’s assets are cumulatively valued at R20 billion. Royal Bafokeng shares are listed on the JSE with a market cap of over R9 billion, with Royal Bafokeng share price rebounding after difficult conditions within the platinum trade.

Royal Bafokeng share price and overall performance has been affected by the falling platinum prices and sluggish economic growth in South Africa, but improved conditions have allowed the company to start moving forward again.

The company has scaled down operations at the Styldrift mine, and is currently reviewing the operating model with a view to move away from being completely contractor-operated, whilst revising capital expenditure and production plans. A second project is being targeted for the farm, with a prefeasibility study having been completed, but the company will only buy fully into this project once market conditions improve.

The group is also upgrading and deepening its shafts and increasing capacity at its concentrator plant, to process 250 000 tonnes per month. The long-term goal is for Royal Bafokeng to achieve production of 470 000 ounces of platinum per year by 2025.

Interim data covering the first six months of 2016 was greatly improved from the prior year, with the group recording a R216.6 million comprehensive profit compared to a R107.8 million loss. Shareholders enjoyed solid dividends and headline earnings per share increases. The results were driven by increases in production, bigger for sale volumes and increases in total cost of sales due to a strengthening platinum price. In line with cash preservation initiatives prompted by the difficult trade conditions, capital expenditure was cut by 55% to R517 million.

As conditions in the mining industry deteriorated, Royal Bafokeng share price took a sharp dip on the live online stocks chart, falling from R74.50 in 2014 to R22.70 by the beginning of 2016. The shares have since showed a solid recovery, as the company reconsolidates its operations and resumes expansion activities. Royal Bafokeng shares are looking well-set to strengthen in the coming years, making them a possible purchase for investors looking to buy for the long-term.

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