[miningmx.com] — ZIMBABWEAN platinum producer Mimosa was by far the best performer for Aquarius Platinum (Aquarius) in the June quarter, which is a telling indictment on the state of the SA platinum sector.
Mimosa reported record platinum group metal (PGM) production as a result of higher volumes, improved head grade and improved recoveries. The mine’s cash margin for the quarter dipped to 55% from 58% in the March quarter, because of lower ruling dollar PGM prices.
By contrast in South Africa, the Kroondal mine saw its cash margin drop from 31% to 15%, while Marikana went back into the red with its cash margin falling from 15% to a negative 6%. Cash margins at the group’s Everest mine dropped from 35% to 10%
The continued excellent performance from Mimosa – which is owned 50/50 by Aquarius and Impala Platinum (Implats) – underlines the potential of the fledgling Zimbabwe platinum mining sector and why it is so important for Aquarius and Implats to reach a workable deal on indigenisation requirements with the Zimbabwe government.
Regarding Zimbabwe’s indigenisation programme, Aquarius CEO Stuart Murray was as tight-lipped over the situation facing Mimosa as Anglo American Platinum CEO Neville Nicolau was on Monday regarding his group’s Unki mine in that country.
Murray said: “The Mimosa mine submitted its indigenisation plan on May 9 in line with the requirements of the Zimbabwean government’s general notice number 114 of 2011.
“There has been no formal acknowledgement of this submission and no further developments to date.”
All three South African mines experienced various production problems which were compounded by lower ruling dollar PGM prices. This, in turn, was made worse by the continued strengthening of the rand against the dollar.
Murray commented: “Operationally, although we were able to expand attributable quarterly production compared to the same period a year ago, volumes from our South African operations fell short of our expectations.
“At Kroondal and Marikana, delays and long lead times for the required new drilling rigs meant that we were required to install our new hanging wall support manually at those mines to meet our unwavering commitment to safety.
“This delayed blasts and negatively impacted production at costs. At Everest, bad ground resulting from a larger-than-expected area of oxidised material on the fringes of the ore body had the same effect.
“At all three mines these problems have been dealt with and we are once more moving towards normal production levels.”
Murray pointed out PGM prices had been hit by the after effects of the Japanese earthquake and tsunami which weakened global auto manufacturing in April and early May.
The average platinum price dipped 1% and the palladium price was 4% lower but the price of rhodium – which is used almost exclusively in automotive applications – dropped 11%.
The rand strengthened by 3% to R6.80/$ resulting in a 5% drop in the basket price received to R10,255 per PGM ounce in the June quarter compared with the March quarter.
Aquarius had already announced on June 1 that it had stopped mining operations and further development at its Blue Ridge mine because of the low basket price.
Murray said: “Discussions continue with the lenders to the mine on a suitable resolution of its debt situation. Aquarius is a significant creditor of the Blue Ridge mine and has extended no corporate guarantees to the other providers of third party debt to the mine.”
Numis analyst Cailey Barker described Aquarius’ fouth quarter results as “disappointing”. He comment that it was “overall a difficult quarter, not helped by soft prices, rising costs and a persistently strong rand”.
– The writer owns shares in Aquarius.
