Operations to restart when profitable
AQUARIUS Platinum, which has idled its Everest mine in Mpumalanga since June 2012 due to weak platinum prices, soft demand and high costs, has begun planning for the possible resumption of operations once the commodity price recovers.
In the latest annual report, Aquarius chief executive Jean Nel said re-opening Everest would help the company to restart operations should there be a sustained improvement in metal prices and a more stable labour environment. The restart is expected to cost between $35 million and $40m (R336m to R448m).
“Everest will only resume production once the board believes that metal supply and demand are healthier and that stronger metal prices are sustainable for a period of time, so as to deliver an acceptable return to shareholders. We are not currently at that point,” said Nel.
He said the development would take 18 months and would reach full production in four year’s time.
“Various options regarding extending Everest’s life of the mine are being explored. In parallel, we continue to assess the merits of combining the assets at Everest [which has ex- cess plant capacity] with those of other producers close by who have significant resources but limited plant capacity.”
In addition, Aquarius idled its 50 percent-owned Chromite Tailings Retreatment Plant, and the Blue Ridge joint venture.
Nel said that the failure of the platinum price to respond to the end of the five-month strike, pointed to an historic lack of supply discipline on the part of South African platinum producers.
“While we remain confident in the medium- to long-term persistence of industrial and investment demand for our metals, the supply surfeit combined with sluggish demand growth does not bode well for platinum price momentum in the short term.
“At Aquarius, our commitment is clear: we will not produce unprofitable ounces; we are not in the business of mining for the sake of production, but rather for sustainable profitability,” said Nel.
He added: “Ultimately, we are custodians of third party capital which informs our focus on generating shareholder returns and positive cash flow”.
In October, the company’s plans to boost its balance sheet were dealt a blow when the $37m sale of Blue Ridge, was canned after the requisite regulatory approvals could not be obtained.
The company was advised that the sale agreement had been terminated as the Chinese led consortium which had been negotiating to purchase the Blue Ridge asset had declined to extend the outside date. Aquarius, which operates the Kroondal mine in South Africa, and Mimmosa in Zimbabwe has become the lowest cost underground the local industry.
The share price on the JSE at close was down 11c to R2.70.