[miningmx.com] — AQUARIUS Platinum (Aquarius) delivered a good operating production performance in the December quarter, increasing attributable platinum group metal (pgm) output to 127,579 ounces.
That’s 3% up on the September 2010 quarter output, and 14% higher than the comparable December quarter of 2009.
Aquarius CEO Stuart Murray said: “I am pleased in particular by the performance of our South African operations. Production was strongly up at Kroondal – our flagship asset – and both Kroondal and Marikana managed to reduce rand cash costs despite ongoing cost pressures.’
Murray added the ramp-up of production from the reopened Everest mine continued smoothly, and the mine was “already in significantly positive cash margin territory’.
He said Aquarius remained “well on target to meet production guidance for the 2011 financial year’.
The production improvement has come at a time when the rand basket price Aquarius receives for its production is rising, despite the continued rand strength against the dollar.
Platinum moved above $1,650/oz during the December quarter, while palladium rose to over $560/oz. So far during the January quarter platinum has risen to $1,810/oz currently and palladium to around $810/oz.
Murray said: “The driver of this price strength remains largely investment demand and the weak dollar as a result of continuing quantitative easing in the US.
“Some improved fundamental demand in the form of encouraging US automotive numbers and strong demand from heavy duty diesel applications was seen late in the quarter.’
Turning to the rand exchange rate, Murray said the average rate for the quarter strengthened 6% to R6.91/$1 from R7.33/$1 as rand carry trade continued to be supported by lower interest rates in the euro and dollar zones.
But he added that, even so, the average pgm basket prices strengthened at all operations in both currencies over the quarter.
The weighted average basket price at the SA operations was R10,098/oz, 5% up on the September quarter.
Murray noted that “rand basket prices have continued to improve in January’.
The Aquarius share price moved up nearly 5% to R41 in trading on the JSE on Thursday morning after the release of these results.
The share has traded between a low of R25 and a high of R53.50 over the past 12 months, which compares with an all-time high of R120 reached in March 2008.
Two recent research reports have reached very different conclusions over Aquarius’ investment prospects.
RBC analyst Leon Esterhuizen has selected Aquarius as his top SA platinum share pick, rating it “outperform, above average risk’.
But Aquarius is the share over which JP Morgan Cazenove analysts Steve Shepherd and Allan Cooke are the most negative.
TheY said: “Our cash flow model suggests the share is relatively expensive. So, fundamentally, it’s hard for us to see it outperforming its platinum peers.’
– Ryan owns shares in Aquarius Platinum
