[miningmx.com] – AQUARIUS Platinum warned shareholders the business would remain under pressure unless there was a fundamental improvement in the dollar value of the platinum price following its September quarter results in which it posted a $10.2m net loss.
The loss is an improvement on the $19.6m loss in the corresponding quarter of the previous financial year and means the group is some way to avoiding the near disastrous $287m net loss in the previous financial year – a period in which the survival of the company was at stake.
However, the business looked set to struggle with CEO, Jean Nel, bringing his near brutal assessment to bear. “The credible operational performance for the quarter, and the significant reduction in the company’s corporate cost base notwithstanding, our business remains marginal at prevailing metal prices, where no improvement appears imminent,” he said in notes to the September quarter figures.
“In our view, the financial numbers reflect a business, and a sector, which is still struggling,” said Investec Securities in a morning note.
The key to the quarter was a strong improvement in production from Aquarius Platinum’s Kroondal mine – up 16% to 53,220 ounces in attributable production – but offset by a spike in costs. Nel said these costs would not occur in the current quarter which included the winter electricity tariff and wage increases.
Given that Nel has stripped corporate costs to the bone, taken a personal cut in salary and imposed austerity on fellow directors, and made a success of adopting an owner-operator model at Kroondal, the company is at the mercy of rand and platinum price fluctuations, the latter of which was significant in rand terms in the quarter.
“This is not a sustainable situation,” said UK brokerage, SP Angel in a note. “Any return in demand in the auto sector should help prices recover with supply remaining constrained,” it said.
Nel said there were signs of growth in automotive market, but a substantial impact on price was not yet expected. “Optimism is growing in the European car market with registrations up 5% year-on- year, although commentators do not expect any material growth for two years,” he said.
Shares in the R3.6bn company slid just over 3% to R7.40/share on the JSE at the time of writing. This is some 48% above its 52-week low recorded exactly a year ago but the stock has lost about 14% this month after gaining just over 20% in the previous two months.
There was some light. The company’s cash position improved to $90.1m from $77.8m in the previous quarter. This will provide important flexibility given that the maturity date for $300m worth of convertible debt draws ever nearer – due in the 2015 calendar year – means Aquarius Platinum will need to continue to develop its cash holdings.
Nel said in the past the company was reviewing all options regarding the debt including swapping part of it for equity, or a total refinancing.
Nel said a suspect had been apprehended and handed over to police after the body of a female miner was discovered earlier this month in a shaft in Kroondal in what appears to have been a criminal act.
