The Herald (Harare)

Zimbabwe: Mimosa Platinum Output Declines

AQUARIUS PLATINUM said production at its local operation Mimosa Mining Company for the quarter ended December 2012 declined by 5 percent to 600 066 tonnes. Revenue for the same period rose 16 percent to US$68 million on improved metal prices.

Recoveries improved slightly to 77,8 percent while volumes processed decreased by 7 percent to 575 638 tonnes. Stockpiles totalled approximately 123 191 tonnes, PGM production decreased by 6 percent to 52 752 PGM ounces in line with forecast.

Mining cash costs increased by 8 percent to US$82 per tonne, and costs per PGM ounce rose 8 percent to $897. Mimosa's cash margin for the period decreased from 20 percent to 16 percent due to increased cost. Aquarius, the world's fourth largest platinum miner, jointly owns Mimosa with Impala Platinum Mines.

Commenting on the results, Aquarius said: "The Mimosa mine continues to operate well, despite growing cost pressures which led to above expectation increases in cost."

Meanwhile, Aquarius chief executive Mr Jean Nel said the company was aiming to normalise production at its two remaining mines. After having placed the bulk of its mining operations under care and maintenance at the height of the downturn in the platinum market, Aquarius is now left with its stake in Kroondal, which it shares with Anglo American Platinum in North West, and Mimosa.

Aquarius reported a 2 percent rise in attributable production from its operating mines in the quarter ended December to 78 987oz of platinum group metals.

The average platinum group metals basket price increased 5 percent for the quarter in dollar terms, and more in rand terms due to the local currency weakening 4 percent.

Mr Nel told BDLive the December quarter had been yet another challenging one, during which industrial relations in South Africa remained strained and metal prices remained low.

"In this regard I am very pleased to report that both of the significant processes we committed to were completed in time and below budget, being the migration to owner operator and the implementation of the revised hanging wall support regime," he said.

According to Mr Nel, these initiatives, combined with the improved productivity by the workforce at Kroondal contributed to the mine's production, which exceeded 100 000oz for the quarter for the first time in three years.

Mimosa management team is focused on addressing costs having implemented a number of initiatives. "The conclusion of the indigenisation agreement between Mimosa and the Government of Zimbabwe was particularly pleasing and Mimosa managing director Mr Winston Chitando played a pivotal role in this regard," Mr Nel said.

"The satisfactory operational improvements notwithstanding, Aquarius remains acutely aware that despite the improvements, the company continued to consume cash during the quarter.

"The price improvements and the weakened rand-to-dollar exchange rate in January combined with the fact that the one-off costs associated with the two aforementioned processes have been completed, is expected to substantially reduce cash consumption and enable the company to start producing cash at mine level," Mr Nel said.

From a platinum group metals supply and demand perspective there seems to be consensus that both platinum and palladium will move into primary supply deficit this year. While encouraging the increase in recycling, the continued depressed demand from the vehicle producers and the substantial above ground inventories renders significant further price hikes unlikely, he said.

For Aquarius, cash preservation and stable production were the main focus, and Mr Nel said that he expected cash generation at current spot prices to remain constrained.

Aquarius said in the quarter, platinum group metal prices rose as persistent illegal strikes triggered concerns for future supply and how it will affect the overall South African economy.

"The pessimism on supply did not last long as the basket price peaked at R12 398/oz in mid-October from a trough R9 525/oz in mid-August, at which point dollar metal prices began to retreat; by the end of October, platinum and palladium were both trading at two-month lows," the company said.

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