[miningmx] — AQUARIUS Platinum’s Kroondal mine, its 50:50 joint venture with Anglo
American Platinum (Amplats), could withstand a further fall in platinum prices and was
unlikely to be placed under care and maintenance, CEO Stuart Murray said on
Wednesday.
Poor market conditions for PGM producers have pushed Aquarius to halt operations at
its other South African assets, Everest and Marikana, saying it would preserve the
resource of these mines for as long as it couldn’t be extracted on a profitable basis.
Kroondal itself recorded a negative cash margin of 6% (positive 30% in 2011) during
the 2012 financial year to end-June. However this came on the back of lower
production, down 19% from 2011, as the group implemented a new hanging-wall
support regime – for safety reasons – at the mine for most of the year.
Presenting the group’s annual results to analysts and investors, Murray said
production at Kroondal would trend back towards full capacity by the end of the
calendar year. Asked under what circumstances Aquarius would put some or all of
Kroondal under care and maintenance, Murray said it would depend on the rand
basket price for PGMs.
He said Kroondal would be profitable, at full production, at an all-in cost basis of
around R9,500 per PGM ounce. The average rand basket price which Aquarius
achieved at all its operation during the 2012 financial year was R10,300 per PGM
ounce.
Murray said he was optimistic that PGM prices wouldn’t fall below that level. “If there’s
any case for optimism it is that the price doesn’t seem to be able to get close to
R9,000,’ Murray said. “Every time it gets below R9,500 it bounces back.
“Does it mean we’re at the bottom of the cycle? I believe we are.’
Murray also scoffed at the notion that a decision to close Kroondal might ultimately
rest with JV partner Amplats, which itself is doing a review of all its operations.
Commenting on the group’s cash position, Murray said Aquarius’s current cash
resources of $180m would be sufficient to manage its operating mines for the next 12
months, but pointed out the company would need to secure additional funding if it was
required to conclude the Booysendal South acquisition from Northam Platinum.
The two companies agreed the R1.2bn transaction (around $150m) in 2011, of which
$15m has already been put in escrow as a deposit. The balance would be payable
once the Department of Mineral Resources has authorised the sale.
Murray refused to be drawn in on the alternatives available to raise the required cash,
despite being challenged by analysts that neither debt funding nor a rights offering
would be viable at this stage. He said the company was taking advice on the available
alternatives and would disclose its decision at a later stage.
Asked about its production forecast for 2013, Murray said Aquarius would be looking
at 320,000 attributable PGM ounces, of which Mimosa would contribute 105,000 oz
and Kroondal 210,000 oz.
