[miningmx.com] –ANGLO American Platinum (Amplats) has highlighted the Unki mine in Zimbabwe as one its growth points, but CEO Neville Nicolau remains tightlipped over how the group will meet Zimbabwean indigenisation requirements.
Nicolau stonewalled in response to questions on Unki from Cadiz Securities analyst Nic Dinham at the presentation of the group’s interim results on Monday.
He initially repeated almost verbatim the statement in the published results notice on Unki which was that “we have the opportunity to expand this mine and we plan steady organic growth as we ramp up the first phase.
“We are working with government to resolve the mining rights issues and are confident of a positive outcome”.
When Dinham queried why Nicolau remained so confident – particularly in the light of the latest statements from the Zimbabwean government – Nicolau replied “because we are”.
Last week Zimbabwe’s Minister for Indigenisation and Economic Empowerment Saviour Kasukwere announced that all 175 proposals over local ownership from foreign mining companies had been rejected by government.
Kasukwere said that any firm which did not meet a September deadline on local black majority ownership would face losing its assets.
Unki is important to Amplats because it is a low-cost operation. Nicolau made it clear Amplats’ future production would be sourced as far as possible from its lowest cost operations as the group strives to keep the bulk of its production in the lower half of the industry cost curve.
Nicolau added Unki should be able to hit full output before the third quarter of 2013 but would only be able to give clearer guidance on this later in 2011.
He said Amplats’ initial opportunity was to start mining the shallow UG2 ore reserves at its Rustenburg mines which had initially been left intact because management was focused on extracting the higher grade Merensky reef.
Nicolau commented that mining the UG2 “requires much less capital compared to the very deep shafts required to continue mining Merensky. Cost of mining will be lower and this will offset the negative impact of a slightly lower grade.
“Overall, this means that we will be able to increase mining in the Rustenburg area in the short term and at relatively low capital and operating cost.”
Next priority was stepping up output from the Mogalakwena (formerly Potgietersrust Platinum) mine where Nicolau said, “we have made good progress on the community issues we face and have improved our capacity to process the very difficult Platreef”.
Unki was another priority for Amplats after which, over the next five to ten years, Nicolau indicated Amplats would develop its largely untouched assets on the Eastern Limb of the platinum-bearing Bushveld Complex.
Nicolau said Amplats’ deep shaft projects near Rustenburg on the Western Limb of the Bushveld Complex would come into play in 10 to 20 years time.
He commented: “While these will be capital intensive shafts we believe they will still be competitive at that time because of our platinum group metal market development initiatives.”
Asked for clearer guidance on the likely trend in working costs given the 13% jump in first half 2011 cash costs, Nicolau said Amplats’ costs were likely to be somewhere between the South African overall consumer price index and the specific rate of inflation in the mining industry.
Nicolau defended Amplats cost performance over the past three years since he took over as CEO pointing out that 63% of the group’s production was located in the bottom half of the industry cost curve at the end of 2011.
