Eastplats fears ongoing market conditions
Posted: Tue, 31 Mar 2009
[miningmx.com] -- Platinum group metals producer Eastern Platinum has posted full year net earnings of $16.4m after 2007’s loss of $26.8m despite selling PGMs below cost price in the fourth quarter of 2008.The average delivered basket price per PGM ounce was $550 in the fourth quarter, a decrease of 54% compared to $1,193 in the third quarter. The operating cash costs net of by-product (chrome) credits was $578 per ounce for the fourth quarter. “Because of the sharp decline in PGM prices in Q4 2008, concentrate deliveries made prior to Q4 2008 were settled in Q4 2008 at much lower prices than those in effect on the dates of the deliveries,” Eastplats said in a management’s discussion and analysis of its full year financial results for the year ended 31 December 2008 on Tuesday. If current market conditions persist for an extended time and PGM prices remain at present levels or lower, the cash flow from its Crocodile River mine (CRM) will be insufficient to advance its development projects, the company said. In the last few months, declining PGM prices and negative market sentiment have lead to Eastplats’ market capitalisation dropping below its book value as at 31 December 2008. “If market volatility and uncertainty continue or worsen, the value of the company’s common shares could continue to be adversely affected, making accessibility to public financing even more difficult,” Eastplats said. The company had no long-term debt at 31 December 2008 and expects to resume generating positive cash flows in the first half of 2009. Eastplats is South Africa's sixth-largest platinum group metals (PGM) producer with assets on the western and eastern limbs of the Bushveld Complex. The company’s primary operating asset is an 87.5% interest in Barplats Investments, whose main assets are the PGM producing CRM and the non-producing Kennedy’s Vale project. Eastplats also has a 75.5% interest in Mareesburg Platinum JV and a 93.4% in Spitzkop PGM Project.