JOHANNESBURG (miningweekly.com) – Most of the platinum ounces produced by the world’s biggest platinum company in the next ten years would come from mechanised mining, Anglo American Platinum (Amplats) CEO Chris Griffith said on Monday.

Delivering a strong set of results for the six months to June 30 – which saw profit soar 704% to R2.43-billion and headline earnings rise to R2.47-billion compared with R157-million in the corresponding period – Griffith outlined how Amplats had identified the assets that formed the company’s future vision of high-quality mines capable of low-cost, modern production and high-margin platinum group metal (PGM) output at diminished safety risk.

“Only the most value maximising projects will be implemented as part of the retained portfolio,” Griffith said at the presentation of results attended by Creamer Media’s Mining Weekly Online.

Amplats’ Mogalakwena mine, a fully mechanised opencast mine in Limpopo, operated at a profit margin of more than 50% in the first half of this year and also already mechanised are the company’s underground Bathopele platinum mine in Rustenburg and the Unki mine in Zimbabwe.

Total equivalent refined platinum production from the mines managed directly by Amplats and joint venture (JV) operations for the half-year was 1 108 000 oz, a 55% increase on the first half of 2014.

Mogalakwena, which produced a 9%-higher 201 000 oz in the six months to June 30, is expected to deliver 360 000 oz this year and 380 000 oz to 400 000 oz next year.

“We believe that Amplats remains the strongest of the PGM miners with flagship mine Mogalakwena being critical in these challenging times,” said Investec Securities in a note.

An optimised mine plan has slashed waste stripping at the rich operation and allowed for the five-times strip ratio to be kept constant for the next decade.

Mogalakwena’s total tonnes rate is expected to be maintained at 100-million tonnes a year, avoiding costs of R1-billion. Many of Amplats’ JV partners, including at Mototolo, Kroondal, Bafokeng Rasimone and the new Styldrift project, have been mechanised for some time.

The wholly owned Twickenham project, which was originally planned as a conventional mine, has been redesigned as a modernised mechanised mine that is heading for approval in 2017.

The Der Brochen platinum project to follow would also be mechanised.

Amandelbult is the only mine in Amplats’ retained portfolio that will not be mechanised, owing mainly to its steeper orebody, which makes mechanisation more difficult.

But a mechanised solution for steeper dips is unfolding as a result of work done at Bathopele, where tracked rather than wheeled machines are being used.

Also, instead of developing a high capital vertical shaft replacement option for Tumela Upper in the large graben area between the Tumela and Dishaba platinum mines, Amplats had come up with a mechanised option, which was far less capital intensive and made use of trackless mining equipment.

“So, even at our one mine where we think it’s more difficult to mechanise, all the new projects that we put in place at Amandelbult will be mechanised,” Griffith told Mining Weekly Online.

Amplats has already made use of low-profile, extra-low-profile and ultra-low-profile mining equipment, the ultra-low units operating in stope heights of less that 1.2 m.

The Twickenham mine would be a combination of extra-low-profile and ultra-low-profile equipment, which had already demonstrated that the next generation of lower-profile, less dilution equipment in place.

Amplats has cut net debt to R12.9-billion from R14.6-billion in December with every one of its operations now cash flow positive.

Expansionary projects are being delayed and capital expenditure (capex) is being cut to R4.5-billion or below.

New finance director Ian Botha reported a weighted average cost of borrowing of 7.3%, R9-billion worth of liquidity headroom at the half-year and limited revolving credit maturity for R1-billion in November this year and R500-million in 2016, which were expected to roll for a further year.

“A much improved set of results in a difficult market environment,” Botha added.

This year's capex is expected to be 25% down at R3-billion year-on-year.

Amplats’ share price fell 4.87% to R255.90 a share on the Johannesburg Stock Exchange at the close on Monday, when gold also fell to its lowest level in five years.