DMR shuts down Smokey Hills

[] — PRODUCTION at Platinum Australia’s flagship Smokey Hills mine has been interrupted for the third time this year in the form of a notice issued by the department of mineral resources (DMR), ordering the group to cease operations, for allegedly failing to comply with social and labour plans.

DMR spokesperson Bheki Khumalo said on Monday PLA’s local subsidiary and holder of the Smokey Hills mining right, Phokathaba Platinum, has made no progress on its social and labour plans – specifically pertaining to local enterprise and human resource development – since the right was issued in 2007.

“Since we’ve issued them with the mining right they’ve never done anything,’ said Khumalo, adding the mine was given a deadline of July 8 to submit a compliance report during a mine inspection in June.

“The information they’ve given us were incomplete, misleading and unverifiable; hence the Section 93 notice,’ Khumalo said.

PLA issued a statement earlier on Monday, saying there were “no reasonable grounds for the DMR claim’. “After receiving legal advice (PLA) believes that the notice.has been served without due process or procedural fairness,’ the statement read.

PLA said it was seeking to urgently meet with the DMR, and would apply for “urgent injunctive relief in the High Court of South Africa’.

Neither Khumalo nor PLA’s London-based public relations consultants were able to provide information on the outcome of the court application by 17:00.

PLA’s Australian Stock Exchange-listed shares closed down 11% at A$0.325 on Monday following the announcement. The counter has now dropped more than 60% since January from around A$0.85, largely due to the non-performance of Smokey Hills. The company could well face a cash squeeze over the next few months if the mine does not deliver according to its revenue target.

In February, operations were disrupted following a dispute between mining contractor JIC Mining and some 600 workers. In May, work at the mine was again halted when a contractor was killed in a mob attack.

The company issued a statement in June, saying that it would for the first time achieve design production during the September quarter, despite the setbacks.
In an report issued earlier in July, mining analyst Troy Irvin of Argonaut Securities said recurring production interruptions at Smokey Hills would continue to drag the share price down.

“Project to date production data shows a business that has struggled to deliver any semblance of consistency,’ he said.

“At this stage, PLA’s sole redeeming feature is rising PGM prices. The stock is currently a high risk investment proposition given the technical and managerial challenges inherent in mining PGM’s in South Africa.’