[miningmx.com] – AQUARIUS Platinum said it would turn its hand to restructuring its balance sheet now it had understanding of the cash generating capacity of its assets, and having sold some non-core assets.
Aquarius Platinum’s balance sheet is dominated by a $300m convertible bond which falls due in 2015. Analysts have questioned the firm’s ability to pay or refinance the bond given the poor trading conditions in the platinum group metal market.
Jean Nel, CEO of Aquarius Platinum, said during the presentation of the group’s interim results today, that the company was now in a better position as it had more certainty in respect of debt carrying position of its assets.
“We are now in a position where the board can assess the refinancing of the bond and the capital structure of the company with an increased level of certainty, knowing where the assets can deliver and their debt carrying capacity,” Nel said.
The company also announced the sale of certain non-core assets. While completion of these sales – one of which is to a Chinese company – would only be completed towards the end of this calendar year, it would still gross funds of about R755m.
Commenting on the timing for the restructuring, Nel said: “I think the way the board approaches this is to look at the best interests in company … We won’t see closure of the asset sale on one day and restructuring of balance sheet the next day”.
“The board is focused on this; I know it’s a focus for our shareholders. When we can be more specific, we will communicate appropriately,” Nel said.
Aquarius Platinum more than halved its interim losses, but difficult trading conditions took the edge off its operational improvements in which the Kroondal mine produced at levels higher than at any time in its history.
Interim headline earnings were $22m in the six months ended December 31, a $34m improvement year-on-year. Cash holdings increased $5m to $83m, and there was a $62m turnaround in net cash flow from its South African operations against a $57m deficit in the previous period.
Yet despite these advances, Nel, was characteristically blunt about the performance. “Aquarius is well aware that the credible operational performance recorded in the half year notwithstanding, no value was created for our shareholders,” he said in comments to the published results.
Shareholders were the company’s only stakeholders not to have benefited from the company’s activities, said Nel.
Investec Securities said in a morning note that despite the operational improvements at Aquarius Platinum, it doubted if it “… was sufficient to warrant the refinancing of the $300m convertible debt at the end of next year”.
A weak platinum pricing environment, the short life of mine of Kroondal (nine years), and the fact that the fate of the profitable Mimosa mine was still in the hands of the Zimbabweans worked against the company, the bank said.
Commenting on Mimosa, which the Zimbabwean government wants to own in terms of its indigenisation policy, Nel said there had been no substantial progress.
“We have had number of engagements with minister [of indigenisation and empowerment], but we have not submitted a revised plan, nor have we reached any agreement with the Zimbabwean government,” said Nel.
A term sheet drafted last year in which Aquarius was to sell half of its interest in the Mimosa mine to the government was ripped up after president Robert Mugabe said the country should not ‘pay’ for the asset as the mineral rights were sovereign property.
“We have had an open and frank discussion, and my view is they are supportive of Mimosa, and they have shared vision for growing the mining sector in Zimbabwe.
“The uncertainty means we can’t plan and I think the government understand this,” said Nel.
