Impala Platinum headline earning plunge 78 pct

Reuters
An employee sets out and sorts ingots of 99.97 percent pure platinum at the Krastsvetmet nonferrous metals plant in Russia's Siberian city of Krasnoyarsk April 12, 2012. REUTERS/Ilya Naymushin

JOHANNESBURG (Reuters) - South African platinum miner Impala Platinum Holdings on Thursday reported a 78 percent plunge in first-half profit and said it would issue a $500 million convertible bond to prop up its ailing balance sheet. Hit by unprecedented violent labour strikes last year, South African mining companies are struggling against rising costs and declining productivity. Implats chief executive Terence Goodlace said the company was currently at break-even level and the launch of a convertible bond would ensure that it can develop three shafts vital to its growth. "We are doing this primarily because of the operating environment in South Africa, the situation with profitability and the fact that we are at break even across the board. We don't want to stop these projects," Goodlace said. Implats said headline earnings per share totaled 128 cents for the six months to end-December, from 573 cents a year earlier. The company said it was hit by a 25 percent decline in production at its strike-hit Rustenburg operations and after it wrote down the value of some payments owed. Headline EPS, the main profit measure in South Africa, strips out certain one-time items. The world's second-largest miner of the precious metal said it wrote down 603 million rand, to reflect payments owed by a third-party company that use its refineries and a tax-related provision for its Zimbabwe unit. Overall gross production was up 2 percent at 865,000 ounces. Implats' Rustenburg operations were hit by a six-week strike in early 2012 and while it managed to escape the deadly labour strife across South Africa's platinum and gold industries later in the year, its mines have struggled to return to pre-strike levels. Above inflation cost increases and a steep hike in the wage bill to avert further illegal strikes pushed up costs. Unit costs were 6 percent higher, with a 17.6 percent hike in wages being a major contributor. The company declared an interim dividend of 35 cents per share. Shares of Implats slid 3 percent to 161.26 rand.