[miningmx.com] –EASTERN Platinum (Eastplats) shares dropped 8.5% to 718c on the JSE on Wednesday, after the release of June quarter results reporting lower production and sharply higher costs.
According to CEO Ian Rozier , production was hit by the dismissal of 15 contract stoping crews in May out of a total of 58 crews at Eastplat’s Crocodile River Mine (CRM).
He said: “The contract crews were dismissed due to management’s concerns over their safety procedures.
“Full replacement of the crews was completed in July 2010 and the company expects that on-reef development and production will increase once the new crews have been properly inducted and trained.’
CRM sold 30,820 ounces of platinum group metals (pgm) in the June quarter, which was 8% down on the 33,383oz sold in the June quarter of 2009.
As a result, rand operating cash costs rose 42% to R6,639/oz (R4,673/oz) while dollar operating cash costs were 59% up at $882/oz ($554/oz).
Despite this, Eastplats made an attributable net profit of $3.4m ($0.3m) thanks to the sharply higher basket price received on sales of $1,015/oz ($679/oz).
Rozier said that because of the higher trend in pgm prices, mine development at the shallow Crocette orebody recommenced on April 4.
He added Eastplats was “currently assessing the status of its three primary Eastern Limb development projects at Spitzkop, Kennedy’s Vale and Mareesburg’.
Rozier said: “As a consequence of the global economic uncertainty and market volatility since 2008, the company’s near-term goal has been, and continues to be, to preserve its cash balances to the greatest extent possible.
“Pgm prices in US dollar terms have recovered since the beginning of 2009, but this has been partially negated by the strength of the rand against the US dollar.
“These prices in rand terms are still more than 40% below those recorded in June 2008, when basket prices reached their peak.
“The company anticipates that pgm prices and the rand/US dollar exchange rate will remain volatile in the short-term.
“If the volatility and uncertainty in the current market persists for an extended time and pgm production and/or prices remain at present levels or lower, then the cash flows from CRM and current cash balances will be insufficient to advance any or all of the company’s development projects to commercial production,’ Rozier said.
