Full Year 2019 Impala Platinum Holdings Ltd Earnings Presentation
Illovo Sep 12, 2019 (Thomson StreetEvents) -- Edited Transcript of Impala Platinum Holdings Ltd earnings conference call or presentation Thursday, September 5, 2019 at 5:00:00am GMT
TEXT version of Transcript
* Gerhard S. Potgieter
Impala Platinum Holdings Limited - COO
* Mark Munroe
Impala Platinum Holdings Limited - Chief Executive of Impala Rustenburg Operations
* Meroonisha Kerber
Impala Platinum Holdings Limited - CFO & Executive Director
* Nicolaas Johannes Muller
Impala Platinum Holdings Limited - CEO & Executive Director
* Sifiso Sibiya
Impala Platinum Holdings Limited - Group Executive of Refining & Marketing
Nicolaas Johannes Muller, Impala Platinum Holdings Limited - CEO & Executive Director 
Welcome to this webcast presentation, during which we will review our results for the year ended 30 June, 2019, together with an update on a number of key strategic imperatives at the group. I am Nico Muller, the CEO of Implats, and I'm joined today by: Mark Munroe, our Impala Rustenburg Chief Executive; Gerhard Potgieter, our Chief Operating Officer; Meroonisha Kerber, our CFO; and Sifiso Sibiya, our Group Executive, Refining and Marketing.
Implats achieved truly stellar results in the financial year 2019. A strong operational performance in key areas allowed us to harness the benefit of improving market conditions and rising rand PGM pricing during the year and deliver a substantially improved financial result with healthy free cash flow generation and a return to a closing net cash position at the end of the year.
We have also affected a number of transformational changes to ensure a long-term, sustainable and attractive future for the company and all its stakeholders. The strategic imperative to reposition the business as a high-value, profitable and competitive PGM producer was meaningfully advanced through an operational and financial turnaround at Impala Rustenburg. Meaningful cash generation substantially improved our balance sheet positioning, while the outperformance of Implats' equity allowed the group to successfully induce early conversion of its U.S. dollar bonds post-year-end in July 2019.
The removal of a material long-dated debt liability has enabled us to further strengthen the balance sheet, expediting delivery of our guided capital allocation priorities. I hope this webcast provides you with clarity and a deeper understanding of the state of our company as well as our intended plans and priorities going forward.
Before we commence, I wish to draw your attention to our normal disclosure statement pertaining to any forward-looking statements that may be made today. I will start today's presentation with a high-level overview of the group's performance, including safety and the key features of the year. This will lead into a more detailed account of the operational performance of Impala Rustenburg presented by Mark Munroe and the rest of the group presented by Gerhard Potgieter. This will be followed by the financial results presented by Meroonisha Kerber. Sifiso Sibiya will provide an overview of the PGM market before I then conclude with our strategic priorities and outlook for the financial year 2020.
Firstly, a few comments as an overview on the last year. Safety remains a key business imperative for the group, and we are committed to achieving zero harm. It is, therefore, with deep regret that we reported 5 work-related fatalities at managed operations during the year. In addition, the Mimosa joint venture reported one fatality in the period.
Implats offers ongoing support to the families in recognition of the severe impact of their loss. Each tragic incident was subject to a rigorous independent investigation with learning shared across the group and remedial action taken to improve controls and prevent reoccurrence. The group delivered an unprecedented improvement in safety performance but experienced a disappointing regression during the last quarter of the year. Implats achieved its best-ever safety performance during the period and led the PGM industry in fatality-free safety rates at the end of the third quarter.
The group's fatal injury frequency rate improved by 28% from the prior year to 0.047 per million man-hours worked with the lost-time injury frequency rate improving by 12% to 5.3 per million man-hours worked. Nine of the group's operations achieved millionaire and/or multimillionaire fatal-free status at the close of the reporting period. Zimplats' consistent safety record, notwithstanding 1 fatality this year, was recognized with various safety recognitions for outstanding performance in the Zimbabwean industry.
Turning our focus to sustainable development. We remain fiercely committed to responsible stewardship and progressive sustainable development practices in our business. Partnering with the state in the regions where we operate and working with our employees, suppliers and house communities to advance shared interest in the best possible way remains an integral part of our strategy and the way we strive to do business. Supporting the improvement in education, health, and social service delivery initiatives forms an integral and fundamental part of our sustainable development strategy.
The group's core business philosophy and values of respect, care and delivery are underpinned by our goals of illuminating harm to the health and safety of our employees and minimizing the potential negative impact of our operating activities on the environment. Our work around safe and healthy workforce has also gained strong momentum. We are proud in particular about the positive impact of our efforts to reduce the effects of our highest hazards, namely TB and HIV/AIDS on our employees.
We are equally pleased with the positive impact of our responsible environmental stewardship in a number of key areas. No major environmental incidents were recorded during the year, marking the sixth consecutive year of this achievement. The number of incidents with limited potential environmental impact also decreased by 26%. Our water consumption decreased during the year, and our recycling efforts also improved.
The most significant air-quality issue for the group relates to the sulfur dioxide emissions from our smelters and refineries, and we are pleased to report our South African operations have maintained their adherence to their air emission licenses. In response to tragic events earlier in the year in Brazil and to match the reporting standards of our domestic and international peer group, the group commissioned independent third-party audits of all its tailing storage facilities during the year. I am pleased to report that the studies confirmed the integrity of all the group's storage facilities with the results publicly available on our group website.
Our host communities remain vital stakeholders, and to this end, we continued to invest in socioeconomic development initiatives. In Zimbabwe, amid a downturn in the socioeconomic climate, the role of Zimplats as a preeminent corporate citizen was maintained through continued broad-based social and environmental support to our varied stakeholders in country.
Shifting our focus to our operational performance, I'm very pleased that we have been able to achieve important improvements in key areas. Tonnes milled from managed operations registered a marginal improvement to 19.47 million tonnes due to good operational performances across the consolidated group assets. Group mine-to-market concentrate production decreased by 8,000 platinum ounces, or less than 1%, due primarily to lower grades at Two Rivers, which saw concentrate reduction decline by 16,000 ounces, or 9%, due to mining of the split reef.
Impala improved production by 3% or 19,000 ounces of platinum with higher volumes from its 16- and 20-shaft growth projects, together with marked improvement in delivery at 12 and 14 shafts. Zimplats and Mimosa both maintained production levels, while Marula, which was impacted by community disruptions in the third quarter, managed to deliver a strong operational result, ending the year only 2,000 platinum ounces down on the previous year. Concentrate deliveries from third parties fell by 27% to a more normal steady-state rate of 189,000 ounces of platinum, in line with market guidance and as a result of a large once-off toll refining contract concluded in the previous year.
Despite ongoing maintenance at furnaces, refined metal production benefited from higher average processing availability during the year with group refined PGM production of 3 million ounces and platinum production of 1.53 million ounces, an increase of 4%. This allowed a partial reduction in previously identified excess pipeline stocks at the group with residual ounces expected to be refined over the next 2 years.
Operating costs were well-controlled during the year. Cost per tonne milled increased by 6% to ZAR 1,096 per tonne milled, while unit cost per ounce refined on a stock-adjusted basis increased by just 4% to ZAR 23,942 per ounce platinum, both well below our estimation of mining inflation during the period. The net unit cost per platinum ounce refined benefited from increased refined mine-to-market production and decreased 8% to ZAR 22,673 per platinum ounce.
Group capital expenditures declined by ZAR 820 million, or 18%, to ZAR 3.79 billion. This was due to slowing replacement spend at Impala and increased prudence in allocating stay-in-business capital spend across the group. Spend at Impala was 28% lower in the year at ZAR 2 billion with spend on 16 and 20 shafts slowing in line with the completion of the capital footprint. A lower rate of mining fleet replacement saw a spend at Zimplats decline by 15% to USD 115 million. Conversely, capital expenditure at Marula increased by 50% to ZAR 152 million as we initiated the new tailings dam extension.
In financial year 2018, we invested ZAR 425 million, acquiring a 15% stake in the Waterberg project, while in the year under review, spend was limited to ZAR 19 million and focused on the definitive feasibility study.
This waterfall chart is a graphical representation of changes in concentrate contributions across the group in the year. As indicated, platinum in concentrate ounces from mine-to-market operations were 1% lower year on year at 1.31 million ounces. Growth from Impala, despite the smaller mining footprint, compensated for the weakness at Two Rivers. Third-party concentrate volumes fell by 27% to 189,000 ounces from 259,000 ounces in the prior period as expected and due to a large once-off toll refining contract concluding in financial year 2018.
Turning to our business performance. As stated, refined platinum ounce produced was 4% higher than the previous year at 1.53 million ounces, benefiting from higher average processing availability during the year. 1.52 million ounces of platinum were sold, which was a 12% improvement on the prior year as we were able to reduce some of our previously identified excess stock. In total, 57,000 ounce of platinum was released.
The 70,000-ounce drawdown at Impala was partially offset by a 13,000-ounce pullup at IRS. Revenue per platinum ounce sold rose by 22% to ZAR 31,765 per platinum ounce. Higher palladium and rhodium pricing were the key drivers behind an 11% stronger received dollar basket price, while the 11% weaker average rand also created headroom.
The 12% increase in platinum ounces sold, combined with the stronger basket price, resulted in an increase of 36% in group revenue to ZAR 35.9 billion. Cost of sales increased by 20% to ZAR 41.8 billion largely due to a substantially reduced credit associated with the movements in the volume and value of inventory. The impact of higher metal prices saw the cost of IRS purchases rise 19% to ZAR 2.1 billion. Our cash operating cost rose by 7.2%.
Higher revenue and well-controlled costs resulted in a gross profit of ZAR 6.8 billion, a fivefold increase from the ZAR 1.1 billion generated in the prior period. Higher sales volumes and rand metal prices combined with below-inflation increases in unit cost as well as the reduced capital resulted in free cash flow of ZAR 7.7 billion for the year. As a result, gross cash, headroom and the net cash position all improved.
Implats ended the year in a positive net cash position of ZAR 1.1 billion, a marked improvement from the ZAR 5.3 billion net debt position at the start of the year. Meroonisha will provide more detail on this and other pertinent financial metrics in the financial review. The graph on the right reflects the revenue and cost of production at each of our operations and clearly shows that all the group operations realized a positive cash and total profit margin during the year.
There were no material changes to Implats' mineral resources and mineral reserves for the 2019 financial year relative to 2018. Estimated total attributable mineral resources declined by 2% to 131.6 million platinum ounces. The major source of variances were an impact of 900,000 platinum ounces due to mining depletion, a decrease of 1 million platinum ounces due to an updated estimate of the Merensky resources at Two Rivers and a decline of 300,000 platinum ounces attributable to the resource model update at Zimplats' Hartley mine.
The estimated total attributable mineral reserves remained unchanged at 21.2 million platinum ounces as production depletions, model updates and tail cutting at Impala, Two Rivers, Marula and Mimosa were offset by an increase in Zimplats through the northern boundary extension at Mupani.
The group made material strides in delivering on a number of aspects of its status strategy to prioritize value over volume. This is centered on 4 key objectives: to successfully restructure Impala Rustenburg; enhance the competitiveness of our portfolio; optimize the balance sheet and capital allocation priorities and processes; and lastly, to strengthen our license to operate.
The execution of Impala restructuring process was advanced during the year. A safe and stable operating performance provided a firm foundation as the process set out to optimize and align the overhead structures and labor complement at the operation to a smaller and more productive future mining footprint. We sustained our mine-to-market production volumes while growing refined output, helping to offset inflationary pressures in the lower unit cost inflation well below prevailing mining inflation rates.
In addition to structural changes at Impala Rustenburg, management continues to explore ways to improve safety, productivity and cost efficiency at other operations. To this end, the group successfully maintained the recalibration of operations at Marula while sustaining industry-leading productivity and safety performances at Mimosa, Two Rivers, Zimplats and Impala Refining Services. The group is advancing a definitive feasibility study on the Waterberg project, furthering our options to grow exposure to low-cost, shallow, palladium-rich mechanized assets.
The improved operational and financial performance has substantially transformed the group's balance sheet during the course of the year. The group yielded ZAR 7.7 billion in free cash flow after funding capital expenditure, including capitalized interest of ZAR 3.9 billion, received continued dividend flow from our joint venture operations, and made debt repayments totaling ZAR 2.2 billion during the year.
We finished the year with a closing net cash position of ZAR 1.1 billion, and post-year-end, successfully incentivized early conversion of the USD 250 million bond due in 2022. The enhanced balance sheet flexibility has increased Implats' ability to navigate an unpredictable price and operating environment. The resultant cash buffer also allows the expedition of capital priorities through consideration of value-accretive organic and acquisitive growth opportunities while accelerating the journey towards delivering sustainable shareholder returns through dividend payments and the contemplation of share buybacks.
I have shared our approach to sustainable development and environmental stewardship. And the protection and strengthening of our license to operate remains the anchor of our strategy and the way in which we seek to do business.
I will now hand over to Mark for a review of our Impala Rustenburg operations.
Mark Munroe, Impala Platinum Holdings Limited - Chief Executive of Impala Rustenburg Operations 
Thank you, Nico. The past year at Impala was characterized by step-change in operational momentum and focus. The safety performance improved. The team produced greater volumes despite a smaller mining footprint. And cost controls were good. Higher refined volumes followed by a build-up of stock in 2018 saw strong sales growth and a very welcome return to free cash generation.
Running through some of the year-on-year performance indicators. Total tonnes milled for the year improved by 2%, or 264,000 tonnes, to 11.2 million tonnes. This was achieved largely due to the strong gain in contributions from each of 12, 14, 16 and 20 shafts, which together added some 890,000 tonnes in cumulative volume, offsetting the impact of the closure of 4 Shaft and the planned scaling down of production at 1 Shaft, which resulted in a negative variance of 554,000 tonnes.
The PGE head grade was 2% weaker at 3.99 grams per tonne, impacted by changes in ore mix due to increased contributions from 16 and 20 Shaft with wider stoping widths and the ratio of development to stoping ore, together with the residual impact of extensive ore parts maintenance at 16 Shaft continue to impact delivery grade.
Merensky volumes increased to 43.1% of the milled total, and together with concentrate optimization, resulted in improved metallurgical recoveries. Together with additional surface feed, platinum production in concentrate increased by 3% to 688,000 ounces.
In financial year 2018, a major furnace rebuild and a subsequent transformer fire reduced available smelting capacity. In 2019, despite the full realign of the #3 furnace during the year, greater processing availability resulted in refined volumes increased by 30% to 754,000 ounces with an estimated drawdown in stock of circa 70,000 ounces.
Total cash cost, including all allocated corporate and marketing costs, increased by 8% to ZAR 17 billion, impacted by the increase in volumes mined by -- mined and by above-inflation CPI inflation, increases on utilities, labor and certain processing consumables.
On a stock-adjusted basis, volume gains for Impala delivered a 4% increase in unit costs to ZAR 24,945 per platinum ounce, while the benefit of higher refined volumes, so unit costs in this measure, declined by 17% to ZAR 22,612 per platinum ounce.
Capital expenditure declined by 28% to ZAR 2 billion with same business spend on mining and processing of ZAR 1.6 billion and a 50% reduction in replacement spend to ZAR 403 million as the projects at 16 and 20 Shaft neared completion. Higher sales volumes and strong rand PGM pricing significantly aided our financial performance, resulting in a welcome return to free cash flow generation of some ZAR 1.9 billion during the period.
While it is prudent to acknowledge the substantial benefit Impala Rustenburg has derived from higher rand pricing and the drawdown in excess stock over the past year, in our view, the operation is fundamentally more robust across a number of key aspects when compared to recent past. Over the past 4 years, the Impala lost-time injury frequency rate has improved by 28%. Our stock-adjusted platinum volumes have increased despite a smaller mining footprint. And we have achieved a 4% compound annual increase in our stock-adjusted unit costs, less than half the rate of prevailing mining inflation over the same period.
Over the past year, we have also seen a 4% increase in mineable face length, higher metallurgical recoveries and a 7% increase in labor productivity. Our safety performance has also improved, reinforcing our review of the potential sustainable value still to be yielded at the mining complex.
Turning now to the platinum ounce contribution from the different operations. When considering performance relative to 2018, only 3 shafts delivered lower volumes year-on-year. At 6 Shaft, a winder breakdown prevented all mined volumes from being hoisted to surface. At 11 Shaft, a disappointing regression in safety impacted production. And at 1 Shaft, output declined in line with the planned ramp-down. All other operations recorded pleasing improvements.
There were notable gains at both 12 and 14 Shaft. These operations were placed on watch as part of the Rustenburg restructuring. But in the past year, 12 Shaft has benefited from improving mining flexibility, and 14 Shaft has seen better mechanized mining productivity. Together, these shafts increased production by a total of 24,000 ounces. 12 Shaft also benefited from improved cost performance and additional tailwinds from a rising UG2 basket price and so delivered a healthy cash contribution this year.
On the other hand, 14 Shaft continued to struggle on these fronts and, despite delivering record annual production, posted a financial loss for the period. Clearly, we still have more work to do at this shaft before we can reconsider its long-term future.
At 16 Shaft, the build-up to steady-state production was impacted by a fatal incident during Q2 and interruptions caused by a main hoisting rope failure and subsequent replacement during Q3. Despite these unplanned disruptions, improved development rates this year resulted in better mining flexibility, which in turn allowed the transfer of additional mining teams from 1 Shaft. In total, platinum production increased by 16,400 ounces to 90,000 ounces of platinum in the year, roughly 50% of planned steady-state production.
Production at 20 Shaft increased by only 4,900 ounces, while the capital build program was completed this year. The decision was taken not to add further mining teams to the Shaft but rather to increase the focus on creating mining flexibility while also comprehensively reassessing our ability to sustainably deliver planned production in the future. I'm pleased to report that we have boosted leadership capacity at this Shaft and instituted strict performance criteria in the new management team. This has already begun to yield results and improve development rates and enhance mining flexibility. The contribution from other sources, which include slag dump and sludge treatment from the shafts and plant, grew by 14,100 ounces to 20,000 ounces in this year.
Turning to key projects. As indicated, progress at 16 Shaft was impacted this year by both a fatal and hoist rope failure, which impacted achieved production and development targets. To-date, capital spend on the project has totaled ZAR 7.4 billion of the estimated ZAR 7.9 billion approved capital vote. The estimated capital construction completion date remains unchanged at November 2021 as does the steady-state production rate of some 180,000 platinum ounces per annum, which is planned from June 2022. During the year, an additional 29 stoping teams were added to the shaft with available face length increasing by 32% to 3.4 kilometers and platinum production rising to 90,000 ounces from 74,000 ounces in the previous period.
The rehabilitation of the C ore pass system is expected to be completed in September 2019 with an opening up of further mineable face length and increasing stoping productivity a key focus for 2020. Platinum production is planned at 120,000 ounces for financial year 2020.
Shifting focus to 20 Shaft. The capital infrastructure construction was completed during the period with total expenditure of ZAR 7.9 billion, in line with approved project vote. The number of stoping teams were reduced during the year to allow for increased focus on mineable face length development, which subsequently increased by 19%.
A comprehensive review of the shaft's future production potential and strategic optionality was completed during the year. This followed another period of sustained underdelivery as a result of challenging ground conditions. Leadership capacity at the shaft has been significantly strengthened and strict quarterly performance parameters instituted to ensure the capital and operating commitment afforded by the group is matched with concomitant delivery from the project.
Platinum production increased by 7% from 69,000 ounces to 74,000 ounces and is planned at 89,000 ounces in financial 2020. Steady-state annual production of 130,000 ounces is now expected from July 2022, a further 12-month delay from previous guidance.
This is an update on the progress that has been made on the restructuring we communicated to you in August last year. As a reminder, this process will see the Rustenburg operation transition from its 10 producing shafts to a consolidated mining footprint of 6 units. A return to profitability through a safe and stable operating performance together with the benefit of higher pricing has vastly improved the status of the process underway. The operation was free cash flow positive for the year, benefiting, as indicated, from higher refined volumes and sales.
4 Shaft has been closed, and 1 Shaft is ramping down, as expected, while production gains at other operating shafts have allowed us to meet planned volumes. Cost, capital and labor have all been reduced in line with the restructuring program focusing on the specific activities over the past year.
The planned reduction in own labor of 1,300 employees was achieved through the natural attrition, reskilling and voluntary separations with only 117 employees retrenched. This was also achieved without industrial action and is testament to the deepening of our working relationship with all stakeholders impacted by the process.
The Section 52 notice for the remainder of the potential effective shafts remains in place, while commercial alternatives for closure are investigated. Ongoing contractor activity at 1 Shaft, as we finalize the option of an outsourced model, has resulted in a short-term headcount increase of 700 people.
A multitude of stakeholder engagements were undertaken during the period, all of which were conducted in a constructive nature. While a number of commercial alternatives for the closure of 1 Shaft were progressed, no suitable offers were received for the sale of the Shaft. A number of approaches based on an outsourced contractor model were received, however, and have culminated in current negotiations with the selected contractor. The Shaft will, therefore, either be closed or outsourced in the first half of financial year 2020.
Working on the assumption of either closure or a contracted-out model at 1 Shaft, together with the closure of 9 Shaft, a Section 189 notice was issued in July 2019, impacting 1,750 employees. A dedicated team has been assembled to design a suitable management structure and cost model for the restructured Impala business, which, where practical, will be instituted in the latter half of this year and incorporated into the next cycle of business planning.
This slide is a graphical representation of some of the key outcomes and implications of the restructuring process, updated with the actual data from the financial year. With our operational improvements, together with the rising rand basket price, have increased the optionality around the Impala operations. Our endgame remains intact with the notable exception of the timing of the planned closure of 12 Shaft. Production, cost and price improvements have led to a 1-year extension in planned operations due to current profitability.
I will now hand over to Gerhard to report on all other operations.
Gerhard S. Potgieter, Impala Platinum Holdings Limited - COO 
Thank you, Mark. Marula had a very satisfactory and stable operating performance, marked by a single but disruptive incident of community unrest early in 2019 calendar year, ahead of national elections. The benefit of delivering higher year-on-your volumes in each of the first, second, and fourth quarters of the year was therefore offset by a weak third quarter when disruptions and equipment failures impacted both mined and milled volumes. As a result, tonnes milled declined by 4% to 1.77 million tonnes. Focused mining resulted in a reduction in stoping width and a PGE head grade increased by 2% to 4.40 grams per tonne. And as a result, platinum production in concentrate declined by 2% to 83,000 ounces from 85,000 ounces in the prior year.
Cash costs at Marula increased by 8% to ZAR 2.3 billion as additional investment was made in employee training and development, together with loading fleet to strengthen ore-handling capacity. Higher costs and lower volumes resulted in unit costs rising by 11% to ZAR 27,602 per ounce, while capital expenditure increased by 15% to ZAR 152 million as spend on a new tailing storage facility began in the latter part of the year.
Marula's rand basket price benefited from its high rate of rhodium and palladium content, resulting in sales revenue improving by 26% to ZAR 3 billion. The operation delivered gross profit of ZAR 300 million and generated ZAR 380 million in free cash flow.
Headline earnings contributions are impacted by intercompany profit adjustments on unsold ounces within the group and the consolidated financing charge on the BEE debt. Management has made good progress towards securing a lasting resolution to the intermittent community disruptions at Marula, where the capital footprint, staffing levels and mine planning are all in place to support annual production in excess of 90,000 ounces of platinum in concentrate.
Last year was an undoubtedly challenging operating period for Two Rivers. Despite reasonable cost controls and delivery against targeted development, mining and milling volumes, the impact of continued mining into low-grade split reef areas and consequential lower recoveries resulted in disappointing and below-planned ounce production and unit costs.
While the tonnes milled were maintained at similar level to the previous year at 3.41 million tonnes, the impact of all stockpiled milling during community unrest, together with increased development tonnage from the accelerated deepening into the neighboring Kalkfontein block and lower mined grade due to the split reef combined to result in a 3% decline in mill grade to 3.52 grams per tonne and also led to weaker concentrated recoveries. As a result, platinum and concentrate production declined by 9% to 147,000 ounces, while costs, which increased by 8% on a gross basis, rose 19% to ZAR 17,330 per platinum ounce produced.
Capital expenditure increased in line with accelerated deepening and development activity and rose 26% to ZAR 571 million in the year. The benefit of higher pricing for Two Rivers UG2 basket offset much of the impact of the operational challenges. And weaker chrome revenues and gross profit of ZAR 963 million increased by 10%, while free cash flow of ZAR 446 million was 16% higher.
Two Rivers enjoys a well-earned reputation as a safe, profitable and efficient producer. Lower grades have been a long-recognized characteristic of the medium-term mine plan for the operation, which traditionally has delivered strong through-the-cycle margins due to a combination of low-cost mechanized mining methods, relatively shallow depth and UG2 orebody with chrome by-production.
While lower grades will remain a key feature for the foreseeable future, management is prioritizing improving mining flexibility to compensate for orebody variability. Together with our partners, we are also considering modifications and capacity expansions in a consolidated plant to improve recoveries and throughput. Given its competitive industry position, the operation is expected to remain a valuable cash contributor to the group. During the year, Implats received dividend payments totaling ZAR 241 million from Two Rivers.
The Zimplats team delivered yet another year of consistent, efficient and profitable production. Increased volumes from the fully redeveloped Bimha mine compensated for contributions from opencast material in the prior period, and tonnes milled were stable year-on-year as was delivered grade. Platinum production was flat at 269,900 platinum ounces in matte and benefited from smelter volumes released ahead of the planned furnace rebuild in the new financial year.
Costs were well contained with absolute savings due to the closure of the opencast section, reduced treatment fees due to export of concentrates in the previous year and tailwinds from the impact of depreciating rand and RTGS on local input pricing.
Cash costs of USD 348 million declined by 2%, while unit costs were also 2% lower at $1,288 per platinum ounce in matte. The planned shutdown of the furnace for a reline started in early June and is expected to be completed over the course of 3 months. During this time, PGM concentrates will be exported to IRS for processing.
Capital expenditure declined 15% to USD 115 million, while replacement capital was stable at $29 million. Lower mining fleet replacement resulted in an 18% reduction in stay-in-business capital in the year.
Zimplats benefited from its high palladium, nickel and copper content despite weaker platinum pricing. Sales revenue increased by 20% to ZAR 9 billion and the operation delivered gross profit of ZAR 2.66 billion in the year. Zimplats generated USD 128 million in free cash and declared an interim dividend of $20 million and a final dividend of $45 million subsequent to year-end.
The development of Mupani mine, which is the replacement for Ngwarati and Rukodzi mines, continues to run ahead of schedule with ore contact reached in the fourth quarter of the year under review. Production from a single fleet began in June, and some 14,800 tonnes of development ore with a contained grade of 2.8 grams per tonne was stockpiled by the end of the period.
The development of surface infrastructure to facilitate early mining has been scheduled. And a total of USD 67 million had been spent on Mupani by year-end. Although the capital project is expected to be completed by July 2024, steady-state platinum production of 85,000 ounces per annum will only be reached when all the teams from the depleted shafts have relocated to Mupani by 2029.
In an equally resilient performance, Mimosa delivered stable tonnes and grade in the financial year 2019. Recoveries are either -- were impacted by challenges caused by power disruptions, which affected mill, grind and residence time. Platinum production in concentrate was therefore 2% lower at 122,100 ounces. Conversely, sales volumes increased by 4% to 121,000 ounces due to the timing of concentrate shipments.
Cash costs increased by 6% to USD 201 million, negatively impacted by off-mine cost, including selling, transport, and insurance expenses. This, together with lower production, resulted in unit costs increasing by 8.2% to $1,646 per ounce.
Capital expenditure increased by 11% to $49 million due to deferrals from 2018 and additional spend on vehicles. Mimosa benefited from higher revenue, and despite inflationary pressures, gross profit of ZAR 773 million increased by 21%, while absolute free cash flow generation was impacted by negative working capital movements, resulting in an outflow of $5 million in the year. During the year, Implats received dividend payments totaling ZAR 153 million from Mimosa.
Impala Refining Services, or IRS, delivered another significant financial contribution to the group, aided by well-controlled costs and higher rand PGM pricing for its basket of production in sales. IRS' long-term concentrate purchase agreements are dominated by ore feeds from both the Great Dyke reef and UG2 resources, which carry favorable metal price baskets.
During the year, IRS received a total of 801,000 ounces from Implats Group operations and third-party resources, 10% less than the previous year when receipts were elevated by a large one-off turning contract. As a result, the growth volume of third-party receipts declined by 27% to 189,000 ounces despite an increase in underlying contractual deliveries due to the renegotiation and extension of longer-term agreements.
Mine-to-market production was impacted by weaker deliveries from Two Rivers and declined by 3% to 612,000 ounces. Refined platinum output declined by 13% to 772,000 ounces, while sales of 771,200 ounces were in line with refined production and were 2% lower year-on-year.
The cash operating costs associated with smelting, refining and marketing IRS production decreased by 4% to ZAR 1.4 billion, highlighting the efficiencies of our group downstream processing capacity. The cost of metals purchased was impacted by higher purchase volumes as well as rand prices and increased 18% to ZAR 23.7 billion. IRS made a gross profit of ZAR 1.9 billion, generated ZAR 1.3 billion in free cash flow and contributed ZAR 2.1 billion to group headline earnings.
Finally, a few words on the Waterberg project. Implats has a 15% participation in the Waterberg project, and a definitive feasibility study, or DFS, conducted in a JV partnership, will be completed during the first half of financial year 2020. The feasibility study proposes a mine utilizing bulk mining methods to produce 400,000 ounces 4E per annum for milled volumes of 400,000 tonnes per month. The time line from start of construction to steady-state production rates is approximately 6 years.
Implats has the option to either increase our 15% stake to 50.01%. Alternatively, we have the option to maintain or sell our 15% interest or enter into a concentrate offtake agreement. All options will be thoroughly interrogated to enhance the competitiveness of our portfolio and value chain while remaining mindful of our strategy to optimize our balance sheet and capital allocation priorities.
I will now hand over to Meroonisha for the financial review.
Meroonisha Kerber, Impala Platinum Holdings Limited - CFO & Executive Director 
Good day, and thank you, Gerhard. I would like to start with a high-level overview of the current year's performance.
Revenue increased by 36%, resulting in gross profit improving fivefold from ZAR 1.1 billion to ZAR 6.8 billion and the gross profit margin increasing to 14.1% from 3.2% in the prior year despite a 20% increase in cost of sales. This increase was largely due to a substantially lower credit to the cost of sales associated with movements in the volume and value of metals inventory. Despite inflation of 6.8%, unit costs were well contained at 4.4%.
Gross profit for the prior year has been restated by ZAR 440 million to ZAR 1.1 billion. This was as a result of reclassifying certain items directly related to the cost of production, including royalties and the movement in rehabilitation provisions.
The group recognized an impairment of ZAR 2.4 billion pretax in its residual investment in Afplats. In the prior year, earnings were impacted by impairments of ZAR 13.6 billion. Of this, ZAR 13 billion related to the impairment of assets in the Rustenburg lease area, while the remaining ZAR 611 million related to Afplats assets.
Other net expenses were impacted by a noncash charge of ZAR 1.6 billion relating to the mark-to-market of the conversion option on the U.S. dollar convertible bond. The increase in the value of this derivative was due to the significant increase in the share price. In the prior year, this mark-to-market had resulted in a gain of ZAR 509 million.
This was partially offset by the increase in other income as a result of an increase of ZAR 342 million in export incentives received by Zimplats; a refund of customs duty penalties to Zimplats of a ZAR 136 million; the receipt of ZAR 300 million in insurance proceeds in respect of the Furnace 5 claim; and lastly, a ZAR 230 million gain relating to fair-value movements in foreign exchange rate colors that were entered into by the group.
The tax charge for the year was ZAR 2.1 billion, an effective tax rate of 64%, driven by improved profitability and further impacted by the ZAR 1.6 billion mark-to-market of the conversion option on the U.S. dollar convertible bonds, which was not tax-deductible, and the ZAR 2.4 billion impairment in Afplats, which only had ZAR 194 million or an 8% associated tax benefit as the full deferred tax had not been raised on the full amount in prior years. In the current year, Zimplats' earnings benefited from the lower statutory tax rate under the mining lease of 25.75% as the additional profits tax, which was payable under the special mining lease, was no longer applicable.
In the prior year, the group's tax credit was reduced by a once-off deferred tax charge of ZAR 1.2 billion arising from a change in the Zimplats tax rate from 15.45% to 25.75% following the conversion of the special mining lease at Zimplats to the 2 new mining leases.
Profit for the year amounted to ZAR 1.2 billion, while headline earnings improved to ZAR 3 billion from a loss of ZAR 1.2 billion in the prior year. The attributable after-tax impact of the impairment of Afplats of ZAR 1.7 billion was added back for headline earnings.
Headline earnings per share improved from a loss of ZAR 1.71 in the prior year to a profit of ZAR 4.23 in the current year. Revenue at ZAR 48.6 billion was ZAR 12.8 billion or 36% higher than the prior year as a result of a 12% or ZAR 4.4 billion increase in sales volumes. Sales in the previous year were impacted by the transformer fire and the resultant build-up of inventory. In the current year, platinum sales volumes increased by 12% to 1.515 million ounces. Palladium sales were 21% higher at 929,000 ounces. Rhodium sales improved by 5% to 206,000 ounces. And nickel sales rose 2% to 12,954 tonnes.
A ZAR 3.7 billion increase in revenue due to the average dollar revenue per platinum ounce sold of $2,237 being $214 or 11% higher than the prior year. Overall, the average prices of the major metals were higher with the exception of platinum, which was 12% lower year-on-year, resulting in a negative variance of ZAR 2.3 billion. Dollar revenue for rhodium and palladium were up ZAR 2.8 billion and ZAR 2.5 billion, respectively, as a result of dollar prices increasing 71% and 22%, respectively.
A 13% or ZAR 4.65 billion benefit from the weaker exchange rate. The average rand rate achieved weakened to ZAR 14.20 to the dollar from ZAR 12.82 in the prior year. And in total, our realized rand revenue per platinum ounce increased by 22% to 31,765 per platinum ounce.
Cost of sales of ZAR 41.8 billion increased by ZAR 7.1 billion from the prior year largely due to a ZAR 3.2 billion decrease in the movement of inventory to ZAR 182 million from ZAR 3.4 billion in the prior year. A drawdown of in-process material was partly offset by the increase in the cost of main products valued at 30th of June, 2019. The higher rand prices resulted in the cost of the inventory being lower than its net realizable value. Thus, no write-down of inventory to net realizable value was required compared to June 2018, where the write-down of inventory to net realizable value resulted in a ZAR 1.5 billion charge to cost of sales.
Cash operating costs, including mining, processing, marketing and corporate activities, increased by ZAR 1.7 billion or 7.2% year-on-year while our stock-adjusted unit costs rose by 4.4% to ZAR 23,942 per ounce. The impact of a weaker rand on translated Zimplats costs was largely offset by efforts to manage costs below inflation and a strong focus on cost control at Impala and other consolidated operations. The cost of metals purchased increased by 22% or ZAR 2.1 billion principally due to higher rand PGM prices during the period.
Royalties increased by ZAR 296 million or 85% due to higher revenue and the impact of the change in effective royalty rates at Zimplats associated with the conversion from a special mining lease -- 2 mining leases. These increases were partially offset by a lower depreciation charge as the carrying value of the Impala Rustenburg assets in the current year were impacted by the ZAR 13 billion impairment, which was accounted for in the prior year.
Revenue growth was partially offset by an increase in cash costs, a decrease in inventory movement and an increase in the cost of metals purchased as discussed in the preceding slides. A weaker rand resulted in exchange losses of ZAR 362 million, which included a ZAR 76 million loss relating to the translation of the U.S. dollar convertible bond. The adverse impact of Zimbabwean RTGS dollar conversion was approximately ZAR 250 million. In the prior year, the foreign exchange movements on metals purchased were included in exchange losses, while in the current year, this movement has been reclassified to cost of sales as it relates directly to the cost of metals purchased.
Other net expenses in the 2019 financial year were negatively impacted by the revaluation of the U.S. dollar bond conversion option of ZAR 1.6 billion, partially offset by the receipt of export incentives of ZAR 516 million as well as a customs duty penalty refund of ZAR 136 million at Zimplats and business interruption insurance proceeds received of ZAR 236 million.
Other net expenses in the prior year included restructuring costs of ZAR 525 million as well as gains on the A1 legal case of ZAR 443 million, together with the gain on the U.S. dollar convertible bond option of ZAR 500 million.
EBITDA, which includes the group's portion of the EBITDA adjustments on associates, improved from ZAR 5.5 billion to ZAR 10.5 billion. Headline earnings benefited from the improved gross profit of ZAR 5.7 billion. This was partially offset by higher taxes and the movements in other net expenses as described earlier.
Headline earnings excluded the after-tax impact of the impairment of Afplats of ZAR 1.7 billion, the receipt of insurance proceeds of ZAR 46 million and the profit on disposal of assets of ZAR 43 million. As a result, headline earnings improved from a loss of ZAR 1.2 billion or a ZAR 1.71 per share in the prior year to a profit of ZAR 3 billion or ZAR 4.23 per share in the current year. If the loss on the mark-to-market of the conversion option of the U.S. dollar bond was added back, headline earnings would have been ZAR 1.6 billion higher at ZAR 4.6 billion, which is equivalent to ZAR 6.40 per share.
IRS earnings benefited from stronger revenue, augmented by the higher other PGM sales with headline earnings increasing from ZAR 1.2 billion to ZAR 2.1 billion. Zimplats earnings benefited from export incentive receipts of ZAR 516 million, a customs duty penalty refund of ZAR 136 million and a lower tax rate.
Headline earnings in the prior year were adversely impacted by the once-off deferred tax charge of ZAR 1.2 billion arising on the change in the tax rate from the SML to the mining lease. Despite a higher effective royalty rate and the nontax deductibility of this charge, headline earnings improved to ZAR 1.3 billion from a loss of ZAR 149 million in the prior year.
Impala reported headline earnings of ZAR 1.1 billion, a swing of ZAR 4 billion from the headline loss of ZAR 3 billion reported in the prior year. Higher sales volumes, well-controlled costs and strong PGM pricing resulted in the first headline profit for the operation in 5 years.
Earnings from our equity accounted investment at Two Rivers were impacted by lower production levels but benefited from the strong rand basket price and improved by ZAR 50 million to ZAR 251 million. At Mimosa, despite higher gross profit year-on-year, RTGS dollar exchange losses and the higher unrealized profit in inventory resulted in headline earnings being ZAR 54 million lower at ZAR 127 million.
Although Marula made a profit for the year of ZAR 149 million, it's headline earnings were reduced by consolidation adjustments relating to the unrealized profit in inventory of ZAR 148 million and the allocation of ZAR 77 million of interest to Marula as a result of the debt that Implats has guaranteed on behalf of the Marula BEE shareholders. As a result, Marula headline losses reduced by ZAR 23 million to ZAR 77 million in the current year.
At the group level, headline earnings were negatively impacted by the ZAR 1.6 billion noncash charge related to the revaluation of the U.S. dollar bond conversion option. Net cash generated from operations improved to ZAR 10.7 billion from a ZAR 1 million outflow in the prior year, benefiting from improved sales volumes and stronger rand metal prices.
The prior year cash flow was impacted by a ZAR 3.5 billion build-up of inventory as a result of the furnace maintenance and the transformer fire incident. Higher cash balances during the period resulted in an increase in interest received, while dividends received of ZAR 473 million were ZAR 210 million higher than the prior year.
CapEx for the year was ZAR 3.9 billion compared to ZAR 4.7 billion in the prior year. The lower capital expenditure was impacted by reductions in stay-in-business capital as well as deferrals of spend mainly due to the timing of furnace maintenance at Impala and Zimplats, which amounted to ZAR 429 million as well as lower spend on replacement projects, which reduced by ZAR 363 million as spend on 16 and 20 Shaft near completion.
Free cash flow of ZAR 7.7 billion improved materially from the ZAR 4.2 billion outflow in the prior year, benefiting from the strong cash flow generation from operations, lower taxes paid, slightly lower finance costs and the ZAR 790 million reduction in capital expenditure. During the year, the group repaid debt of ZAR 2.2 billion, of which ZAR 1.5 billion related to the repayment of the revolving credit facility, and the remaining amount related to the capital repayment on Zimplats' facility with Standard Bank.
Cash increased by ZAR 5.2 billion. The currency translation impact on cash for the period amounted to ZAR 653 million and mainly related to RTGS dollars. As a result, the group ended the year with a cash balance of ZAR 8.2 billion, an overall improvement of ZAR 4.5 billion on the prior year.
The carrying value of the U.S. dollar convertible bond was impacted by a weaker closing exchange rate at year-end, but this was partially offset by gains in the cross-currency interest rate swap. Post-year-end, Implats successfully incentivized conversion by the U.S. dollar bondholders of the $250 million U.S. convertible bond. More detail on this will be provided later on in the presentation.
Zimplats' debt was reduced by a scheduled capital repayment with the remaining capital repayment due in December 2019. The Marula BEE debt of ZAR 888 million is due for repayment in June 2020.
Closing net cash after debt and excluding finance leases was ZAR 1.1 billion, a ZAR 6.4 billion swing from the net debt position of ZAR 5.3 billion at the end of June 2018. Included in cash balances is only ZAR 4 million in RTGS dollars, which are the local Zimbabwean dollars.
During the year, management reorganized its existing bilateral RCF facilities with its lending banks and concluded a club facility with the same group of lending banks. This will afford the group greater funding flexibility in the future. This revolving credit facility matures in June 2021.
The group has headroom of ZAR 12.2 billion available comprising of cash resources and undrawn converted facilities of ZAR 4 billion. In addition, the full ZAR 2 billion of the metal prepayment facility remained unutilized at year-end.
We had previously indicated excess in process stocks of 160,000 ounces of platinum together with associated other platinum group metals. During the period, improved available processing capacity allowed a reduction in stock at Impala of approximately 70,000 ounces, while stocks at IRS increased by 13,000 ounces, resulting in a cumulative release of 57,000 ounces. At 30th of June, 2019, the value of the residual excess identified stocks of 103,000 ounces at current rand basket pricing equated to a net realizable value of ZAR 4.8 billion. The remaining excess stock is expected to be released in more or less equal amounts over the next 2 years. That's around 50,000 ounces are expected to be released by the end of June 2020.
The main reason for the longer time frame is the impact of contract extensions with some of our third-party customers and an extension in the planned furnace maintenance schedule. Scheduled furnace maintenance in the 2020 financial year will result in overall stock levels increasing in quarter 1 as a result of the Zimplats furnace rebuild and, again, in early quarter 3, when we will undertake maintenance of furnace 4. The optimization of the Implats balance sheet through a reduction and restructuring of existing debt is a key pillar of our strategy to reposition the group as a profitable, sustainable and competitive business with clear capital allocation priorities.
The U.S. dollar convertible bond was identified as a priority, given its higher relative risk profile and costs when combined with the cross-currency interest rate swap. As a result of our strong free cash flow generation in the 2019 financial year and our equity price trading in excess of the conversion price, we decided to opportunistically approach bondholders in order to induce early conversion of these bonds and, in doing so, extinguish a material debt liability for the group.
Implats launched an invitation to the holders of the U.S. dollar convertible bond in July to convert their holdings into the associated underlying equity entitlement in return for a cash payment to compensate bondholders for both accrued interest up to the date of conversion and the future coupon payments foregone. Our invitation was overwhelmingly accepted with 99.9% bondholders accepting our terms and submitting conversion notices with the cash consideration fixed at USD 30,070 per bond, representing a premium of 15% to the face value of the bonds. The total cost of the invitation of ZAR 524 million, which comprised an incentive payment of ZAR 510 million and accrued interest of ZAR 14 million, was paid in late July with an issuance of ZAR 64.3 million new shares completed on 1 August.
The financial impacts of the bond conversion are as follows: the cost of the incentive to induce conversion of ZAR 510 million was expensed; interest on the bond up to the date of conversion was expensed; gross debt was reduced by ZAR 3 billion, being the carrying value of the convertible bond as at the date of conversion as this liability was transferred to equity on conversion.
The fair value of the U.S. dollar bond conversion option of ZAR 1.6 billion, after being adjusted for a further loss of ZAR 230 million to the date of conversion, was transferred to equity. The cancellation of the cross-currency interest rate swap yielded a net loss of ZAR 78 million after accounting for the receipt of ZAR 77 million on the unwind as the value of the cross-currency interest rate swap at 30th June, 2019, was ZAR 151 million.
Going forward, our cash interest payments will reduce by ZAR 319 million per year. Our income statement will no longer be impacted by volatility due to the requirement to fair value the U.S. dollar bond conversion option, the cross-currency interest rate swap and the translation effect of the dollar bond, which although noncash items, have had a material impact on reported headline earnings.
It is also worth noting that, at year-end, the U.S. dollar bonds were antidilutive to both headline and basic earnings per share. Despite the expected 64.3 million increase in shares, if the U.S. bonds were converted, the benefit of adjusting earnings for the combined impact of the fair value of the conversion option, the interest on the bond as well as the foreign exchange losses would have resulted in both basic and headline earnings per share increasing.
Sifiso Sibiya, Impala Platinum Holdings Limited - Group Executive of Refining & Marketing 
Good day, and thank you, Meroonisha. While platinum pricing continued to struggle, palladium, rhodium, iridium and ruthenium continued to be much higher during the year, and together with (inaudible) nickel pricing resulted in an 11% increase in our received dollar basket price. Platinum has recovered off its lows, aided by strong investor interest in the early parts of 2019 and affirming gold price, while palladium and rhodium pricing continued to be fueled by tightening emission standards governing the gasoline light-duty fleet. The rand remains vulnerable to both domestic and international macroeconomic factors, and volatility remains elevated as a result.
While the emerging market carry trade and risk on arguments impact positively on rand performance as both the high-yielding and liquid currency, domestic dynamics have arguably worsened over the year with weak revenue receipts and increased financing variance at ailing state-owned enterprises, red flags to rating agencies and international investors.
The rand weakened by 11% year-on-year, and as a result of this and our sales mix, we achieved a 22% increase in our chief rand basket. We continue to benefit from a diversified portfolio of assets, which gives us exposure to Merensky, UG2, and Dyke Reef ore. Softer platinum pricing saw another step-change in the revenue mix for the group with contributions at IRS, Two Rivers, Marula, Mimosa and Zimplats, all below the debt for the first time.
Moving on to demand for our major metals. After week in to 2018, automotive sales have continued to slump in the first half of 2019. In particular, the Chinese market has been weak, registering a double-digit decline in sales volume in the year to June.
Sales are facing headwinds from weak consumer confidence, efforts to manage bloated inventory in a runup to the implementation of China 6 and a disappointing set of stimulus measures announced by government in early June. In the U.S., the secondhand market is having a bump-up at the expense of new-car sales, while in Western Europe, lingering doubts about the prospects of economic growth in the light of trade uncertainty and Brexit continues to weigh on consumer sentiment.
Diesel market share has continued to fall in Europe, but the rate of decline has shown signs of slowing, and PR efforts to defend the technology have been stepped up. The net result has been negative revisions to expected short- and medium-term growth and grow out light-duty sales volume, with a contraction now expected in 2019 and a modest recovery in 2020, bringing some resolution and clarity in the economic outlook.
Recent data from the PGI continues to highlight the challenges faced in the jewelry market in China where evolving consumer tastes and ever-increasing competition, together with contracting promotional spend, has limited the potential to reach of sponsor programs and support. Losses in China overshadow growth in India, the U.S. and Japan, where innovative partnerships and market development efforts continue to drive improving manufacturing sentiment and sales growth.
Investment demand for platinum was particularly strong in the first half of the year with record ETF inflows and a record in speculative interest. This waned somewhat into the second quarter as investors reassessed the likelihood of a strike threat and supply rationalization. Palladium investment has contracted as rising lease rates and price volatility decreased speculative appetite.
Turning now to our view of platinum, palladium and rhodium fundamental supply and demand picture for 2019. Our expectations for the platinum market supplies have been reduced by strong investor purchases in the first half of the year, which have offset modest reductions in automotive demand. Supply is likely to remain elevated as producers went through accumulated concentrate inventory, while demand from jewelry and automotive is expected to decline year-on-year.
Our palladium deficit has been narrowed on lower assumed Chinese auto demand. While loadings are set to increase and we still expect growth, weaker sales have reduced assumed demand in the medium term.
Pleasingly, efforts to reintroduce platinum in consortium auto catalyst system has gained traction with research and development indicating a clear time line and the ability to balance both the palladium deficit and the platinum surplus in the medium term.
Rhodium demand is set to grow, and we see the market to deficits in the medium term as a result. Drivers of near-term growth are more structural than cyclical in nature and are linked to rising worth levels in emerging markets, tightening emission standards, and the ongoing evolution of industrial and chemical processes.
Despite this business confidence, levels of industrial production and consumer demand all play an important role in determining the year-to-year demand of our primary products. The fundamentals for both palladium and rhodium have strengthened over the past year with increasing demand and constrained short-term supply, which has been exhibited by the refining time line associated with secondary supplies. Early signs of a supply response are evident, however, with medium-term supply growth of palladium is likely to outstrip that of both platinum and, in particular, rhodium.
Jewelry remains a key source of demand for platinum, and the PGI continues to focus on initiatives aimed at reining growth in the Chinese market, while delivering continued volumes gains in the U.S., India and Japan.
Leasing progress has been made on the reintroduction of platinum in gasoline system in key auto markets, and the opportunities presented by (inaudible), and the hydrogen economy is also gaining growth recognition.
I will now hand over to Nico to conclude the presentation.
Nicolaas Johannes Muller, Impala Platinum Holdings Limited - CEO & Executive Director 
Thank you, Sifiso. On this note, I wish to conclude by providing guidance for the financial year 2020.
Group production volumes will be supported by the release of approximately 50,000 ounces of platinum in-process inventory, and estimated refined platinum production for the full year is estimated between 1.45 million to 1.55 million ounces.
At the individual operations, Impala will be between 640,000 and 690,000 ounces, Zimplats between 265,000 to 280,000 ounces, Two Rivers between 140,000 and 160,000 ounces, Mimosa between 110,000 and 125,000 ounces, Marula between 80,000 and 95,000 ounces, and third-party deliveries between 170,000 and 185,000 ounces. The operating cost is expected to be between ZAR 25,500 and ZAR 26,500 per platinum ounce on a stock-adjusted basis.
Capital, finally, is expected to be between ZAR 4.3 billion and ZAR 4.5 billion.
And on that note, this concludes our financial year 2019 results presentation. We thank you for your participation and taking the time to listen to this presentation. Thank you.