[miningmx.com] — PLATINUM AUSTRALIA (PLA) is hoping for a fresh start after a share price plunge of around 90% in 2011, announcing on Thursday it would from now on conduct its own operations at the Smokey Hills mine.
JIC Mining Services is the current contract miner, having taken over from Redpath Mining late 2010. According to PLA, the transition process should be completed by end-February.
“The decision to move to owner operator is the result of extensive planning and evaluation work completed over a number of months to determine the most effective operational model for the Smokey Hills mine,’ read a company statement.
“PLA believes it will be in a stronger position to meet its production targets and will benefit from cost savings of 10% to 15%…over the next three months with the removal of a number of duplicated management positions and the contractors’ overheads and profit.
“There is expected to be minimal disruption to production during the transition and no significant additional expenditure will be required.’
PLA said it planned to retain all sub contractors on the site, while the employees of JIC would be offered continuity of employment under their existing contracts.
STAYING AFLOAT
PLA raised A$3.6m in December through a rights issue at $0.08 per share, after an attempt to in $4.4m at $0.12 per share had failed. The company traded at $0.85 in January 2011.
PLA’s woes stem largely from the non-performance of Smokey Hills, which was supposed to have ramped up to its nameplate capacity of 60,000 tonnes per month by June 2011. It had achieved just over half of this end-September.
A quick count shows the mine lost some 20-odd production days in 2011 due to labour disputes, an incident in which a mining contractor got killed by an angry mob and a Section 93 closure issued by the Department of Mineral Resources. In addition, JIC fired around 75% of the workforce in February, causing a further delay in ramping up output.
Managing director John Lewins told Miningmx on Thursday Smokey Hills achieved between 65% and 70% of its output target in December, and was aiming to achieve full volume during the June-quarter of this year. He said the money raised would be sufficient to keep PLA afloat until such time.
“The 60,000oz will generate a substantial income, even at the current (platinum) prices,’ Lewins said. “It obviously helps that the rand is trading lower.’
Asked how the business plans to regain the confidence of the market, Lewins said the successful ramp-up of Smokey Hills was of the greatest importance.
“Our priority is to get Smokey Hills performing,’ he said. “It’s very clear Smokey Hills has to deliver to its potential.’
