[miningmx.com] — AQUARIUS Platinum had to contend with another
quarter of wafer-thin or negative margins at its major operations, posting a bigger
loss than what the market expected.
The only exception to this rule was the performance of Mimosa, Aquarius’s joint
venture operation with Impala Platinum in Zimbabwe.
Posting quarterly results for the period to end-March on Monday, Aquarius CEO Stuart
Murray blamed labour issues and regulatory hurdles for its failure to turn the woeful
performance of the December-quarter around. These factors, together with continuing
cost pressures, have made the platinum industry a very difficult place to be, Murray
said.
Marikana and Everest, two of Aquarius’s four major mining assets, recorded negative
cash margins of 5% and 27% respectively, with Kroondal’s margin coming in at 9%.
The operating margin for Mimosa was 31%.
Overall, Aquarius’s total production of 97,802 ounces (oz) of PGMs was 7% lower than
the December quarter’s and 20% lower than the previous corresponding period. The
group posted a net loss of $9.4m, but still holds $207m in cash.
“The first quarter of the calendar year is always a difficult one, due largely to
seasonal absenteeism following the Christmas and New Year holidays,’ Murray said in
commentary accompanying the results.
“This year was worse than usual, with the customary poor labour performance and
concomitant reduced number of shirts exacerbated by continuing Section 54
interference in our Rustenburg operations.
“At Everest, poor ground conditions have not been helped by constant labour go-slows
and the failure by the Department of Mineral Resources [DMR] to grant the mining
right to the Hoogland open pit, despite our application being lodged over a year ago.
“These unnecessary operational and regulatory headwinds are occurring against a
backdrop of a pricing environment that remains relentlessly tough, with unabated on-
mine cost inflation, little fundamental demand recovery and continuing volatility in
financial markets.
“The result is that margins are under severe pressure throughout the industry, and it
is my view that labour unions and the government need to start co-operating
constructively with mining companies immediately if the very sustainability of the
platinum industry and the thousands of jobs it provides is not to be threatened.’
There was no immediate end in sight to the woes of especially Everest, where
Aquarius’s attributable production of 15,926 oz represents respective decreases of
43% on the corresponding period and 15% on the December-quarter.
The company said it was not sure when it would be able to increase production from
mining the adjacent Hoogland pit as it was waiting on the DMR for a mining licence,
while labour relations remained tense.
“Both of these factors will continue to negatively impact on Everest’s performance,’
said the group. “In addition, mining at Everest is approaching surface, with the result
that ground conditions are deteriorating due to weathering.’
However, improvements could come from a retraining exercise and an optimisation of
the mining cycle. Management is also considering the optimal manner in which to
integrate the Booysendal South property into the mine.
“The alternatives are either to continue mining and developing concurrently, or to
cease mining and expedite development so that full capacity is achieved earlier at the
expense of ounce production for a 12 to 18 month period.’
At Mimosa, the group is trying to counter load-shedding interruptions by paying for
electricity imports from Cabhora Basa on behalf of Zimbabwean power utility Zesa.
Zesa’s supply from Cabhora has been limited due to poor payment.
“Discussions are ongoing with Zesa and [Cabhora] to finalise a structure in which
Mimosa will assist in clearing the amount owed to [Cabhora] in return for
uninterrupted power supply,’ Aquarius said.
Aquarius said Mimosa has also now complied with a directive of Zimbabwe’s Reserve
Bank to localise all offshore accounts in that country, while discussions over the
structure, valuation and funding of its approved indigenisation plan is continuing.
Shares in the company were trading 4.4% lower during trade on Monday, selling for
R16.70 each around noon.
