[miningmx.com] – VANISHING margins in the South African platinum
industry claimed its first major victim with Eastern Platinum (EastPlats) shuttering its
Mareesburg open-pit project and Kennedy’s Vale Concentrator Project.
Ian Rozier, CEO of EastPlats, said the platinum market had given the company no
other choice and added that a review of Crocodile River Mine (CRM), its operating
entity, and well as its mining contractor, JIC Mining, was continuing.
Shares in EastPlats fell nearly 15% on the Toronto Stock Exchange last night.
Rozier said there was no intrinsic problem with the project, which was 30% complete,
and that it could therefore be kicked into motion at short notice, provided market
conditions would support such a decision.
The project’s civil works were mostly complete, the process equipment had been
procured and engineering was over 90% complete. Construction was about 20%
complete, said Rozier.
“These factors, and particularly the continued cost pressures that we are
experiencing in South Africa, make the platinum sector an extremely difficult space in
which to operate,’ said Rozier in a statement to the JSE this morning.
He added that EastPlats did not believe major platinum producers would cut back
production. This is notwithstanding a review of operations currently underway by
Anglo American Platinum.
Thomson Reuters GFMS forecast earlier this year that the platinum market would
continue to remain under pressure for 2012 and beyond, owing to a growing supply
surplus. It estimated a surplus of 480,000 ounces this year amid inventories of 4.5
million oz. Overall industry inventories could grow to 5 million oz in 2013, it said.
“After a considerable amount of review and evaluation, Eastplats has been proactive
in taking this action in the interests of maximising the value of the PGM [platinum
group metal] resources in the company,’ said Rozier.
EastPlats reported a $76.5m loss for the 2011 financial year; equal to a $0.08c loss
per share and compared to a $13.4m profit in the 2010 financial year. Eastplats
blamed the performance on industrial action and Section 54 work stoppages that were
mostly incurred during the fourth quarter.
Eastplats reported an operating loss in each of the four quarters of 2011, but the
fourth-quarter performance was a horror show. With an operating loss of $76.5m, it
was easily more than double the combined operating loss of the first nine months,
which totalled nearly $28m.
“As mentioned in the company’s first-quarter financial statements, the performance
of the mining contractor, JIC Mining Services, at the Maroelabult section of CRM, is
also being reviewed,’ Eastplats said in its announcement.
