Anooraq gets stuck in

Brendan Ryan | Mon, 16 Nov 2009 19:08
[miningmx.com] -- ANOORAQ Resources (Anooraq) has made a good start now that it has taken management control of the former Lebowa Platinum Mines from Anglo Platinum but there’s still a long way to go.

September quarterly results released today show mined and milled production up 15% and unit operating costs down 13% but Lebowa – now renamed Bokoni Mines - remains in a loss-making situation.

Anooraq CEO Philip Kotze commented, “we are encouraged by the early gains achieved at the operations which have resulted in a real decrease in unit costs, rationalision of capital expenditures and identification of potential new sources of lower-cost ounces, such as those presented by the vamping opportunities at the Vertical and Middelpunt Hill shafts.”

Bokoni produced 30,835oz of platinum group metals (pgm) during the quarter. Anooraq’s aim is to push production to a phase one growth target of 270,000oz of pgm by 2014. The mine produced 147,600oz of pgm in its 2008 financial year.

Turning to costs Kotze said that, despite the improvements made in the quarter, “operating costs remain at an unacceptably high level when compared to the industry average and the company continues to drive cost reduction initiatives towards achieving lower unit operating costs.”

As part of that campaign Anooraq is cutting 300 contractors from its work force.

Kotze noted, “the company will continue to assess labour needs until an optimal production to services ratio mix is achieved at the operation. Improved operating costs from the labour restructuring initiative should begin in the first quarter of 2010.”

He added that management had reduced forecast capital expenditure without “compromising the planned production build-up” at the new Brakfontein Merensky mine which will ramp up output over the next three years.

Total capex for the next three financial years from 2010 to 2102 is now estimated at R846m.

Kotze said the four year growth plan to 270,000oz of pgm remained “fully funded without further recourse to capital markets.”

Anooraq shares rose 5% to C$0.82 on the Toronto Stock Exchange on the release of these results and the impact of further positive investor sentiment over platinum which pushed its price above $1,430/oz.