Aquarius considers temporary closure of Blue Ridge

Brendan Ryan | Thu, 29 Jul 2010 11:05

[miningmx.com] -- AQUARIUS Platinum (Aquarius) may stop production from its Blue Ridge mine for up to seven months to make major changes to the mining infrastructure.

Aquarius acquired the Blue Ridge mine last year when it took over AIM-listed Ridge Mining in an all-equity deal.

According to the Aquarius quarterly production report published on Thursday the Blue Ridge mine produced 10,202 oz of platinum group metals (pgm) in the June quarter of which 5,101oz were attributable to Aquarius.

That was sharply down on the 15,338oz produced in the March quarter because of the loss of 22 production days through section 54 safety stoppages.

Two workers were killed at the mine in June after which it was shut down for a two week period during which all employees were retrained.

According to Aquarius CEO Stuart Murray , the Blue Ridge mine also suffered from “extremely high levels of labour turnover at the beginning of the quarter, largely due to the active poaching of skilled personnel by competitors. This had a negative effect on the production achieved overall.”

Murray said the current low rand pgm basket price at Blue Ridge and the ongoing focus on safe mining operations required a “fundamental redevelopment programme at the mine which is expected to run for a 10 to 12 month period.”

He added, “the optimisation programme will focus on mine access, ore and waste mass flows.

“It will provide for a third mine access point and reinstates the construction of a second decline, the plans for which were shelved by the prior managers.

“The redevelopment programme is focussed on the efficient and sustainable operation of the mine in the medium and long-term.

“Given certain short-term geological and mining infrastructure limitations, management has proposed that one of the options to be considered is the termination of production at the mine for up to seven months.

“It is management’s view that this option will prove the most cash-efficient. Blue Ridge will continue to be treated as a project for accounting purposes through this process.

“If the proposed optimisation plan for Blue Ridge is approved by its shareholders and implemented as described above, the expected pgm production from Blue Ridge for the 2011 financial year will be substantially lower than guided, pending conclusion of the plan.”

No estimate on the likely production losses nor of the capital cost of the development work required at Blue Ridge were given in the June quarter production report.

Murray told Miningmx this was because three possible scenarios were still under consideration but he said a cash injection of between US$12m and $15m into Blue Ridge was likely.

This is the latest in a string of problems to hit Aquarius. The group is currently nearing completion of the redevelopment of its Everest North mine at a cost of about R259m after it was closed in December 2008 when the decline shaft was affected by subsidence.

Aquarius is also introducing a new hanging wall support system across its mechanised mining operations following the incident at its Marikana mine on July 6 when five mineworkers were killed by a fall of ground.

The writer owns shares in Aquarius Platinum.