Tough quarter for Anooraq

[] — ANOORAQ Resources shares got off to a flying start in trading on the JSE on Wednesday morning jumping nearly 10% to R11.9 ahead of the release of the March quarter results.

But the stock pulled back sharply in later trade after release of those numbers which revealed the company had experienced what CEO Philip Kotze described as a “very difficult quarter’.

Reason was the 8% drop in underground production to 229,344t for the quarter (December quarter – 248,999t) caused by the labour restructuring at the Bokoni mine (the former Lebowa Platinum operation).

That was compounded by problems with the concentrator plant which knocked the head grade down by 8% so that overall production of platinum group metals (pgm) was 13% down at 26,677oz (30,512oz).

Kotze said the March quarter marked a turning point for the Bokoni mine because of the completion of the labour restructuring exercise.

Production would now build up steadily from the current level of around 80,000t/month to the target level of 160,000t/month over the next three years.

He added six shifts had been lost during the March quarter because of labour unrest as a result of which 103 workers had been dismissed for taking part in unprotected industrial action.

In addition, 153 workers had been retrenched while another 374 had been shifted from service functions into production positions.

While total operating costs dropped 9% to C$29.6m in the quarter the fall in production resulted in higher unit operating costs.

The cost per tonne milled rose 7% to R987 (R924/t) while the cost per ounce of pgm produced rose 13% to R8,516 (R7,537).

Kotze said management was sticking to its prior forecasts of reducing unit costs to R905/t milled and R6,700/oz of pgm produced by June and to R805/t milled and R5,250/oz of pgm produced by December.

He said the Bokoni mine would be cash flow positive after paying for capital expenditure at the forecast December cost levels.