JOHANNESBURG (miningweekly.com) - Platinum-miner Eastern Platinum (Eastplats), which reported lower first quarter results on Wednesday, said that it expected a more profitable second quarter, owing to higher platinum group metals (PGMs) price trends and the fact that the company's mining rates were normalising, after an initial slow start in 2010.

Eastplats reported a net profit of $824 000 for the quarter ended March 31, 2010, compared with just over $3-million for of the same period in 2009.

The average delivered basket price for a PGM ounce was $959/oz during the period, an increase of 63% compared to $590/oz for the comparable period last year.

However, Eastplats CEO Ian Rozier said that, even though PGM prices in dollar terms had seen a recovery since the recessionary period, it had been negated by the strength of the rand against the dollar during the quarter.

"As a result, while the realised basket prices that the company is receiving have improved since the lows of December 2008, these prices, in rand terms, are still nearly 50% below those recorded in July 2008 when prices reached their peak."

Eastplats anticipated that the PGM prices and the rand/dollar exchange rate would remain volatile in the short term.

The company's said that, owing to unanticipated industrial action at its main Crodile River Mine (CRM) in South Africa's North West province, as well as continued economic uncertainty, its near-term goal would continue to focus on the preservation of cash balances.

Eastplats resumed mine development at the Crocette section at CRM in April. Production at CRM was 30 531 oz, a decrease of 7% compared with the first quarter production the previous year, mainly owing to a much slower than anticipated start-up following the December holiday season.

Further, Eastplats' three primary Eastern Limb development projects - Spitzkop, Kennedy`s Vale and Mareesburg - had remained on care-and-maintenance since the end of 2008.

"With the rising trend in PGM prices, we are currently assessing the status of all of these projects, with a view to determining an appropriate development schedule given the market conditions, Eastplat`s current cash balances, its ability to generate sufficient cash flows, and its ability to obtain additional funding in the current market environment," said Rozier.

Additional funding would be required for further development of the projects and might include external debt financing, joint venture or other third party participation in one or more of the company's projects, or the public or private sales of equity or debt securities of Eastplats.

However, Rozier noted that if the volatility and uncertainty in the current market persist for an extended time and PGM production and/or prices remain at present levels or lower, then the cash flows from the company's CRM project and current cash balances would be insufficient to advance any, or all, of its development projects to commercial production.

"This, along with credit markets that may tighten and result in higher financing costs, could negatively affect the company's ability to obtain equity financing, external debt financing or third party participation."

If adequate funds were not available, it might be required to further delay or reduce the scope of any or all of its development projects.

At the end of the quarter, Eastplats had just over $17-million in cash.

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