JOHANNESBURG (miningweekly.com) – Midtier platinum-miner Aquarius Platinum was seeing more activity and interest in the platinum-group metals (PGMs) market, with prices showing some improvement, CEO Stuart Murray said on Wednesday.

Speaking during a conference call regarding the group’s results, Murray noted that it was seeing more activity from the automotive sector, in particular.

Once the automotive sector was re-established, better times for the industry might return, he stated.

Aquarius expected to boost production by between 8% and 12% above the 2009 financial year’s attributable output of 455 675 PGMs 4E (platinum, palladium, rhodium and gold) oz, putting production at between 490 000 PGMs 4E oz and 500 000 PGMs 4E oz for the 2010 financial year.

Murray noted that while the 2009 financial year output was down 9% on the 500 203 PGMs 4E oz produced in the 2008 financial year, the combined production from all the operations, besides Everest and Platinum Mile, had increased by 13%.

The company had halted production at the Everest mine, in South Africa’s Mpumalanga province, in December, owing to subsidence.

Murray said on Wednesday that the mine would not start producing again in the 2010 financial year, unless prices continued to improve the way they currently were. The mine was only expected to restart production in the 2010 financial year.

Aquarius was currently preparing to move on to the second phase of reopening the mine.

The R173-million phase two would involve: the completion of a decline development, the establishment of underground services and the reclamation of infrastructure, the equipping of declines and strike sections, and the re-establishment of stoping sections.

Production at Kroondal increased by 8% in the year to 422 078 PGMs 4E oz, of which 211 039 oz were attributable to Aquarius. Marikana’s production for the year was up 26% to 157 938 PGMs 4E oz, of which 78 969 PGMs 4E oz were attributable to the company.

Murray noted that it was a key issue for the company to keep these two operations cash flow positive, while it was waiting for a recovery on the pricing front.

He added that there were “no real big wins” in terms of cutting costs in the South African mining industry, as the industry was faced with wage inflation of between 10% and 15% and higher electricity costs.

Further, production at the Mimosa mine, in Zimbabwe, which remained an “exceptional investment” for Aquarius, increased by 20% to 180 022 PGMs 4E oz, of which 90 111 oz were attributable to the midtier miner.

Murray emphasised that the dollarisation of the Zimbabwean economy had “caused havoc” on its working costs, as the inflation rate came down from about one-million percent to about 5% in a month’s time.

FINANCIAL RESULTS

The group had narrowed its net loss for the year ended June 30, 2009, to $45,7-million, down from a net loss of $70,1-million at the end of the first half of the year, as it recorded a net profit of $24,4-million in the second half of the year.

However, revenues for the full year declined by 66% to $311-million, down from $919-million the year before, owing to the collapse of PGMs prices at the end of 2008.

Nevertheless, the group had accumulated a total cash balance of $153,6-million at the end of the financial year, which Murray stated would give it the firepower to deliver the newly acquired Blue Ridge project and reopen the Everest mine, as well as providing it with a buffer should the “bad times return”.

Aquarius had spent about $59-million in capital expenditure (capex) during the year, of which about $45-million was spent on sustaining its operations.

It expected to spend from a further $30-million to $40-million in capex, excluding its Everest mine, in the 2010 financial year.

Meanwhile, Murray noted that it would continue to look for and negotiate potential acquisitions or tie-ups with other players in the PGMs industry.

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