Platmin to keep nose to the grindstone

[] — PLATMIN has given itself a lot of work to do at its open pit Pilanesberg Platinum mine during 2011, saying it would double production to break even by the end of the year.

Releasing annual results to end-December on Thursday, Platmin reported a loss of $65.4m (equating to a net loss of 0.09 US cents per share), after it failed to make good on an initial production forecast of 120,000oz for the year. Following several downward adjustments to its output figure for 2010, the group achieved production of 60,067oz of 4E (3 PGM + Au) metal sales.

The biggest thorn in the flesh for Platmin was its inability to strip adequate volumes of waste in the right areas and sequence in order to expose adequate volumes of the silicate reefs and UG2 reef which lied at the bottom of the reef succession.

“To date, the mining contractor has been unable to achieve the volumes required to address this, despite radical restructuring of the organisation,’ read a management discussion on the results.

“However, powerful interventions in the areas of critical spares for the fleet, preventative maintenance, standby machinery and shift rostering are expected to produce significantly better waste volumes, exposing higher reef tonnages, shortly.’

Said CEO Tom Dale: “This is a big ship. We move four million tonnes of rock per month. We want to move five million tonnes in the short term to expose the reef necessary to create operating flexibility.

“I expect us to reach monthly operating break even (about 12,500oz) during 2011 and full monthly production of 20,000oz during 2012.’

The drain placed by the Pilanesberg mine on Platmin’s balance sheet caused the company to issue new shares to the tune of $90m to stay cash positive.

The company also opted to convert its $135m convertible debentures, which was due to mature on December 2010, into shares at $0.84/share.

According to RBC Capital Markets analyst Leon Esterhuizen, in a report dated February 22, the capital raising and conversion should’ve been adequate to see Platmin through the cash squeeze.

“The company must now deliver on production and cost promises,’ said Esterhuizen. “We remain confident that the team will sort out the operational issues and deliver a profitable operation in the longer term, forming the basis for further internally funded expansion.’

Platmin repeated its desire to participate in the regional consolidation of the Western Limb of the Bushveld Complex, following the acquisition of the western portion of the Sedibelo project, adjacent to the Pilanesberg pit.