[miningmx.com] – AQUARIUS Platinum made further in-roads into its parlous financial position narrowing the full-year loss ended June to $11m – a $84m reversal year-on-year – and registering a cash inflow of $21m (2013: $20m outflow).
The company, the market value of which has improved 17% to R6.2bn in 12 months, also said it would “carefully assess selected growth opportunities” suggesting it was just about lifting its head after a torrid two-year period of cost-cutting and restructuring.
Aquarius Platinum more than doubled its cash balance to $137m in the 2014 financial year, thanks to a $226m rights offer through which it settled $165.7m in debt.
It’s significant that Anglo American Platinum (Amplats) chose to retain its joint venture with Aquarius Platinum, in terms of its own strategic review, while jettisoning others such as the Pandora Joint Venture it holds with Lonmin.
Aquarius has three operating assets, the Kroondal Platinum Mine in which it has a 50% stake, a 91.7% stake in the platinum surface operation, Platinum Mile, and half of Mimosa Platinum with the balance owned by Impala Platinum.
Kroondal booked 430,000 platinum group metal (PGM) ounces of production in the 2014 financial year – its highest output since 2008 while Mimosa took fourth quarter output to an all-time high of 60,000 oz, the company said.
Jean Nel, CEO of Aquarius Platinum since 2013, said in an announcement to the Johannesburg Stock Exchange that the company was now positioned to generate free cash for shareholders who had been neglected stakeholders in the past.
The outcome of Nel’s efforts in the period under review for shareholders was a 1.38 cents per share loss which compares to a 8.8c/share loss in the 2013 financial year.
“Against this backdrop Aquarius’ focus will remain resolutely on continuing to improve safety, production and cost performances across the Group, whilst carefully assessing selected growth opportunities,” said Nel in published comments.
As part of its recovery plan, Aquarius had announced earlier this calendar year plans to sell its Krudfontein and Blue Ridge prospects which had been deemed non-core.
The Krudfontein property had received Section 11 (change of control) approval from South Africa’s Department of Mineral Resources (DMR) and would be sold for $27m of which $10.8m would be handed on to another party.
The sale of Blue Ridge was more complex, however, with some 34 conditions precedent and which included “numerous” parties such as the Chinese government. Aquarius said it expected the transaction to proceed, but warned there was “significant execution risk”.
The company was hoping to stop the implementation by the Zimbabwean government of certain fiscal changes including a law, effective January 1, 2014 to disallow royalty payments in that country as a deductible expense against taxable income.
The other law it was hoping to stop was the payment of VAT on unbeneficiated platinum due to be implemented in January, 2015. The Zimbabwean government passed the law in an effort to encourage construction of smelting facilities in the country.
Discussions with the Zimbabwean government had also been had on the long-standing matter of indigenisation which calls for foreign-owned miners operating in the country to sell 51% of their assets. While there had been “frequent interaction” no agreements of definitive terms had been achieved, Aquarius Platinum said.
Numis Securities said the performance was encouraging. “While the bottom line numbers continue to look ugly against a backdrop of a difficult operating environment some real improvement here,” it said.
Said Investec Securities in a morning note: “Operationally the company appears to be delivering, however the PGM market remains a particularly tough place to be.” It added the rights issue had given the company “breathing space”.
