The additional dividend will be funded from the company’s net cash reserves, which stand at around R17.6bn. Credit: Marlon Trottmann/Shutterstock.

Anglo American Platinum, commonly known as Amplats, has announced an additional cash dividend of R59 per share, amounting to a total payout of R15.7bn ahead of its planned spin-off into a stand-alone entity.

This move is likely to help optimise its financial position before the split, ensuring that both the parent company and the newly separated entity have appropriate capital structures.

The cash payout is supplementary to a final dividend of R3 per share, or around R800m.

This move comes despite the company experiencing a 40% decline in annual profit, amounting to approximately R8.4bn, due to lower prices of platinum-group metals (PGMs).

Amplats CEO Craig Miller, during a call with journalists, confirmed that the additional dividend will be funded from the company’s net cash reserves, which stand at around R17.6bn, reported Reuters.

Miller highlighted the sustained demand for PGMs, primarily from the automotive industry, and noted that the slowdown in the rollout of battery electric vehicles, which do not use these metals, would continue to benefit Amplats.

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Miller also pointed out that the reduction in investment in new South African PGM mines could lead to future supply constraints.

CFO Sayurie Naidoo reinforced the company’s financial stability, stating: “All our assets are cash generative and therefore we expect by the end of the year we will still be in a cash neutral position.”

Naidoo also expressed confidence in the company’s ability to execute its strategy under various price scenarios.

Amplats reported a 4% increase in sales volumes to 4.1 million ounces in 2024 and a 13% reduction in all-in sustaining cost to $986 per 3E (platinum, rhodium and palladium) ounce, surpassing the target of $1,050.

The company also generated R14.6bn in operating free cash flow, an increase from R3.2bn in 2023.

The demerger from parent company Anglo American is scheduled to be completed by June, following Anglo American’s restructuring strategy after it rejected a $49bn takeover bid from BHP last year.

Anglo American is also in the process of divesting its coal, nickel and De Beers diamond units, while planning to retain a 19.9% stake in Amplats post-demerger.

Ahead of the separation, Amplats is establishing an independent capital structure to maintain a robust balance sheet, which will support its strategic priorities and allow shareholders to participate in value creation.

The company has assured that there will be no changes to its capital return policy following the demerger and intends to keep leverage below 1.0x net debt/EBITDA (earnings before interest, taxes, depreciation and amortisation) throughout the economic cycle.