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Eastplats struggles to realise higher PGM prices

Ines Schumacher | Thu, 13 Aug 2009 17:44
[miningmx.com] -- Despite a 15% strengthening in platinum group metal (PGM) prices since March, Eastern Platinum recorded another slump in profits.

The junior platinum producer reported a net profit attributable to equity shareholders of $317,000 for the quarter ended 30 June 2009, a 89% decline from the previous quarter’s $3.1m.

PGM prices are still 50% below those recorded in July 2008, despite the upturn in prices during the quarter.

On top of that, the recent strengthening of the rand against the US dollar means Eastern Platinum has not been able to fully realise the strengthening of PGM prices over the June quarter.

Rand operating cash costs per ounce have decreased by 25% since the fourth quarter of 2008 as a result of operating cost cutting measures.

“In light of the current global economic uncertainty, the company anticipates that PGM prices will remain depressed and the Rand-US dollar exchange rate will remain volatile in the short term,” Eastern Platinum said in its management discussion of the results.

Eastern Platinum reiterated if current market conditions persist and PGM prices remain depressed, the cash flows from CRM and the company’s current cash balance would be insufficient to advance any of its three primary development projects.

The company’s Crocodile River Mine (CRM) recorded a 10% increase in production. However, Eastern Platinum expects reduced production in the third quarter following the dismissal of contractors who were involved in an illegal sit-in at CRM in July.

The company anticipates the new mining crews will return production to budgeted levels in the fourth quarter.




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