AngloPlat considers raising output

[] –THE platinum market had improved to the point where Anglo Platinum (AngloPlat) may increase its platinum production for 2010 by 150,000oz to 200,000oz.

The group’s current stated production target for 2010 is 2.5 million ounces (moz) of platinum.

AngloPlat CEO Neville Nicolau told financial media at the group’s Rustenburg operations on Tuesday that he would prefer to make a more definitive statement on production targets in the middle of the year.

“It’s still very early in the year. Lots of things can happen. Last year the world was falling apart but so far this year, it is in a better space and we think the market may be able to take the extra platinum production.

“AngloPlat is on its way to recovery and, if we can get through this year holding costs flat, I believe the market will rerate us.’

Turning to the platinum price, Nicolau said: “While the dollar price of platinum has moved above $1,700/oz. it’s the rand basket price which we receive that is the key differential.’

SA platinum companies mine platinum as their primary product but also produce a range of precious and base metals as byproducts, of which the most important are palladium, rhodium, copper and nickel.

The companies calculate their revenues based on a basket price per ounce of platinum metal sold. This means the total amount received from the sale of platinum, plus all byproduct metal revenues divided by the physical volume of platinum sold.

Nicolau said: “The rule of thumb is that, at a basket price of R13,000 per platinum ounce sold, we would break even on our actual working costs.

“At R17,500/oz we would be able to meet project capital expenditure as well as debt payments. Currently the basket price is around R19,300/oz. “

Nicolau also raised the possibility that AngloPlat could increase its annual production to between 2.9m oz and 3m oz within six years.

He said: “At the moment we are stress-testing our business model to see if that rise in production is feasible in terms of the availability of fundamental requirements such as power and water.

“We want to make sure we can deliver on our promises before we actually make such a prediction on future production,’ he said.

That Nicolau is even considering such expansion is significant because AngloPlat last year dropped its ambitious long-term growth strategy to reach an output of 3.5moz/year of platinum.

Nicolau said at the time that the growth target was not justified in terms of market demand and, as part of a sweeping cost-cutting and rationalisation programme, he shut down three shaft systems.

He said on Tuesday: “When you produce 40% of the world’s platinum, then to have a strategy of growth at any cost is a bit crazy. “

Asked what his plans were for those closed shafts, Nicolau said studies were under way on their future.

Options included the use of one of the shafts to extend the life of an existing “pool and share’ joint venture with Aquarius Platinum.