TORONTO (miningweekly.com) – The hefty decline in Eastern Platinum shares on Thursday was “overblown”, CEO Ian Rozier told analysts on a conference call.

Eastplats reported first-quarter results overnight, including a net loss and a 29% drop in earnings before interest, tax, depreciation and amortisation, mainly thanks to lower production levels.

The company also said that operations had been affected and some damage sustained last week at its flagship Crocodile River mine in South Africa, after employee protests linked to ongoing wage negotiations.

Shares in the company fell as much as 27% in Toronto on Thursday morning, before recovering some of the losses later in the day.

But Rozier said the protests had been blown out of proportion, noting that the mine had restarted production.

“This is not some sort of terminal event here. There's been a lot of very shrill (statements) from all sectors of the business and the media about what's been going on there.

“And it's overblown. As has been the reaction on the markets I might add.”

The lower production and earnings should also not have been a surprise, after Eastplats reported its quarterly output numbers as early as April 18, Rozier commented.

The company said at the time that the “traditional slow start” in January, combined with the introduction of revised support methods, meant that first-quarter production fell 17% year-on-year.

Rozier declined to comment on Thursday on what the effect of the labour disruptions over the last week could have on production.

Eastplats presented its latest wage offer to representatives of the National Union of Mineworkers on May 5, but the offer was rejected by union members.

A day later, a group of employees protested at the mine site and damaged some property, prompting Eastplats to withdraw other staff from the site.

After assistance from the Congress of South African Trade Unions and NUM representatives, the around 180 workers involved eventually left the mine at the end of last week, Eastpats said.

The mine remained halted while teams assessed the site, finding damage to the underground electrical and pumping equipment that had caused flooding, as well as damage to the ventilation system.

The workers involved have been suspended and the company is conducting an investigation of what happened.

But while the mine progressively restarted operations as repairs were completed and it was deemed safe, there has been more industrial action, including an illegal blockade to stop nonstriking workers from entering the mine.

“Just to clarify, there are no riots at our mines, there are no major demonstrations,” Rozier said.

“There have been illegal actions of a very small minority of our employees that have not prevented the mine from operating, and we are very confident that we will soon be back at full production.”

FIRST QUARTER

Eastplats recorded a net loss attributable to shareholders of $5,63-million, compared with earnings of $824 000 in the first quarter of 2010.

The company ended the quarter with cash, cash equivalents and short term investments of $349,72-million.

Shares in the miner fell 13,5% in Toronto, to C$0,90 apiece by 16:18 in Toronto.

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