JOHANNESBURG (miningweekly.com) - Midtier platinum-miner Aquarius Platinum posted a net profit in the September quarter, despite production falling by almost 25% as a result of industrial action and mine closures.

The company, which owns mines in South Africa and Zimbabwe, boosted first-quarter profit to $9,5-million, from a loss of $21,5-million a year earlier, when sales adjustments caused by lower platinum group metals (PGMs) prices had negatively impacted on its performance.

However, while dollar metal prices had improved in the quarter under review, CEO Stuart Murray warned that the continuing strength of the rand and rising input costs, most notably electricity, would place margins in the South African platinum industry under pressure.

The PGM dollar basket price increased by 6% in the first quarter, but electricity costs rose by 44%, while the average rand/dollar exchange rate appreciated by 8% to R7,89.

Aquarius' first-quarter production fell from 128 366 oz in September 2008 to 96 500 oz in the quarter under review, as an unprotected strike by employees of the underground mining contractor Murray & Roberts Cementation at Kroondal and Marikana hit output.

The company had lost about 16 000 PGM ounces of attributable production owing to the strike, which led to the dismissal of 3 900 contractor employees.

Management measures, such as working additional shifts, were being implemented to recover the production lost during the course of the financial year.

As a result of the industrial action and electricity tariff increases, reductions in unit costs did not materialise at the Kroondal and Marikana mines.

Murray also said that the group would make a decision on when to resume mining operations at Everest "only when market circumstances are more favourable".

Mining operations at Everest were suspended in December, following a subsidence incident. The Department of Mineral Resources had removed its original suspension instruction, allowing normal operations to resume.

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