PERTH (miningweekly.com) – Midtier platinum-miner Aquarius, which owns operations in South Africa and Zimbabwe, posted a big jump in its third-quarter profit as platinum-group metals (PGMs) prices strengthened.
The JSE- and ASX-listed Aquarius lifted net profit to $23,2-million in the March quarter, up 257% from the $6,5-million in the same quarter last year, despite comparatively flat production.
Total production at 103 286 oz for the quarter was flat, when compared with the third quarter of 2009, but declined when compared with the 112 359 oz produced in the December quarter.
CEO Stuart Murray said that production levels were down as a result of fewer shifts over the Christmas and New Year period, and the commensurately lower production was exacerbated by some degree of "teething problems" at the newly acquired Blue Ridge mine, as well as the reduced availability of feed material at the tailings retreatment operations.
He said that these issues were being resolved.
Murray also noted that the third quarter was characterised by improving markets, rising dollar PGMs prices and a relatively stable rand, which together contributed to improving cash margins at its operations.
The continued slow recovery in the developed world's automotive industry was expected to continue, underpinning PGMs prices in the final quarter of the financial year, a period which Murray said was likely to see operational and production metrics in line with the second quarter.
US dollar prices for platinum and palladium strengthened materially during January, in response to investor interest in the new exchange-traded funds (ETFs), physically backed by those metals, which were listed in early January in the US and Switzerland.
ETFs prices rose sharply during the first part of the quarter, helping to drive prices, before levelling off for the remainder of the period.
"Towards the end of the quarter, investment demand was replaced to some degree by increasing fundamental demand from industry. Auto companies have begun restocking in response to slowly improving consumer sentiments in the US, European Union and Japan, and increased demand for imported luxury vehicles in China," Murray said.
He added that platinum jewellery demand from China remained robust in the face of increasing US dollar prices, with platinum volumes increasing in March, following a seasonally weaker February and the Chinese New Year.
"PGM prices continue to reflect improving fundamental market demand, with prices rising across all PGM metals during the third quarter and into April 2010," he said.
Palladium and rhodium also recorded the largest average price increase, at 27% and 17% respectively. Platinum prices increased by 12%.
Revenue for the quarter under review increased by 64%, Murray said, from $78,5-million in the previous corresponding period, to $128,8-milllion.
Measured on a PGM ounce basis, this represented an increase from $808/PGM oz in the previous corresponding period, to $1 347/PGM oz during the quarter.
Aquarius also reported that it had submitted a proposal outlining its indigenisation plans to the Zimbabwean government by the April 15 deadline.
The group, which owns 50% of the Mimosa mine in southern Zimbabwe, did not provide further details.
Zimbabwe's controversial policy of transferring majority control of foreign-owned firms to black Zimbabweans took effect on March 1. Companies had until mid-April to submit plans to show how they will sell 51% of their shares to black Zimbabweans within five years.
SEARCH FOR NEW AQPSA MD
Meanwhile, Aquarius announced that Hugo Holl had resigned as MD of its South African operating subsidiary, citing personal reasons.
The group had started a process to search for a successor, both internally and externally, it said.
Holl would remain as MD of Aquarius Platinum South Africa (AQPSA) until the end of the current financial year. Holl was with Aquarius for eight years and was appointed as AQPSA MD in 2008.