Implats cuts back at Marula mine

[] — IMPALA Platinum (Implats) is to restructure its underperforming Marula Platinum mine near Steelpoort and retrench an unspecified number of workers.

According to a statement released on Friday, a full strategic review of Marula is under way because the mine “has continued to underperform against the operational targets that management has set.

“Recent underperformance is due to logistical constraints as a result of the conversion from mechanised to conventional mining at Clapham shaft. Driekop shaft continues to perform well.

“Initial indications are that Marula should remain a 70,000 oz per annum producer for the next two years as opposed to growing to 95,000 oz of refined platinum by 2013. This will enable the completion of the conversion project.’

According to a report published on April 19 by JP Morgan Cazenove analysts Steve Shepherd and Allan Cooke, “Marula has limited potential to excite investors.

“So far it has fairly consistently delivered disappointment. Management has struggled to settle on an effective mine design causing initial production, capex and cost targets to be missed.”

Latest production results show that Marula slipped badly in the March quarter when platinum production dropped to 14,000 ounces from the quarterly average of about 18,000oz reported over the previous year.

According to Implats, production at Marula in the March quarter was hit by safety stoppages which cost the mine 2,000 oz of production but the operation was also “constrained by the lack of mining flexibility’.

Friday’s statement said the new strategy “entails an increased focus on development to open up mineable face and logistical initiatives such as the relocation of trackless workshops to underground and the extension of the chairlift to surface.’

While in London for Platinum Week, Implats CEO David Brown told Reuters on May 17 that he expected Implats to produce 1.82 million oz of platinum in its current financial year to end-June instead of the original target of 1.85m oz.

Implats said on Friday: “Given that the mine is currently staffed for a higher level of production, the company is now in the process of investigating right-sizing of the cost base for a lower level of production. This will result in staff reductions.’

Investor relations executive Bob Gilmour said it was too early to say how many jobs would be lost at the mine. “We should know where we stand by the end of June,” he commented.

Marula is sandwiched between Anglo American Platinum’s (Amplats’) Twickenham project and the Modikwa platinum mine, which is a joint venture between Amplats and African Rainbow Minerals.

According to the JP Morgan analysts, “in our view this asset (Marula) might be slipping into the a “non-core’ category – though we must stress that the management has not (recently) indicated that this might be the case. Perhaps the outcome in Zimbabwe might influence this.

“Alternatively, if Amplats were to show any inclination of interest in it, it might a “chip’ that could be played in a negotiation regarding Royal Bafokeng Platinum.

“Again, we must stress that the management teams of both Amplats and Implats have made no suggestion that this might be the case.’

The writer owns shares in Implats.