Stage 3 electricity load curtailments have cost midtier platinum-group metals (PGMs) producer Royal Bafokeng Platinum (RBPlat) a total of 34 hours of milling time, translating into about 13 000 t in lost production, during the six months ended June 30, the company said on the release of its financial results for the first half of the 2015 financial year.

Given the current power generation constraints of State-owned power utility Eskom, power management has been a key operational focus to minimise the impact of load curtailment on production, the company said in a press statement.

RBPlat’s operational strategy involves a reduction in power use by restricting metallurgical operations, specifically crushing, so that underground operations can continue unaffected when load-shedding is implemented.

To date, this strategy has proven effective in managing the intermittent Stage 1 and 2 load curtailments, with the direct impact of 312 hours of crusher plant downtime being successfully absorbed without negatively impacting on output.

Stage 3 load curtailments, however, did impact on production, with the milling section and crushing operations being stopped in order to meet the associated 20% power consumption reduction requirement from Eskom, said the company.

Further, indirect impacts of the Eskom curtailments include reduced recovery, increased maintenance and repairs owing to unscheduled stopping and starting of the concentrator plant and other mine equipment designed to run continuously.

As part of its half-year results, RBPlat announced that its capital expenditure (capex) had increased to about R1.1-billion owing mainly to the higher expenditure at Styldrift I.

Expansion and replacement capex increased by R348-million and R10-million year-on-year respectively. Stay-in-business capex decreased by R23-million over the same period.

At its half-year results presentation, RBPlat also acknowledged two mine-related fatalities during the first half of the year and another one that took place after the reporting period.

“On behalf of the board, I extend my condolences to the loved ones of Messrs Amelio Paquete, Alberto Jose Muchanga and Kayalethu Sidumo, who lost their lives at RBPlat’s operations,” said RBPlat CEO Steve Phiri.

RBPlat’s safety and operational performances, which were below expectations, accounted for the lower production volumes and ounce output, against the backdrop of significant softening in commodity prices, said Phiri.

Scaling Down Styldrift
In the wake of sustained depressed PGMs market conditions, in order to protect the group’s balance sheet, the RBPlat board of directors announced its strategic decision to materially reduce construction activities and related capex at the Styldrift I expansion project, in the North West.

In RBPlat’s results for the first half of the financial year, Phiri described the period under review as the company’s most challenging since the group took control of the Bafokeng Rasimone platinum mine (BRPM) joint venture in 2010.

The Styldrift project area, adjacent to the existing Boschkoppie mining area, is located about 5.5 km from the existing BRPM.

The project will exploit one of the last major Merensky mining blocks on the Western Bushveld.

Styldrift I will deliver an underground operation, which will be accessed through a twin vertical shaft system, with the main shaft being sunk to 758 m and the services shaft to 723 m.

At Styldrift I, the intent is to reduce the level of activities to such an extent that expenditure can be serviced from excess cash flows generated from operations at RBPlat’s existing BRPM operations as well as from revenue generated from on-reef development at Styldrift I.

By the end of June 2015, the Styldrift I project was 55.8% complete. The project’s capex for the first half of the year amounted to R980-million, bringing the total project expenditure to R4.79-billion to date.

F

irst rock was hoisted from the newly commissioned main shaft on June 29, 2015. Surface silos, offices, change houses and the lamp room have been commissioned and are operational.

“Following the scaling down on project expenditure, the board will continuously monitor the situation and the necessary adaptive decisions will be taken as market conditions change or improve,” said Phiri.

The board believes that it is imperative to maintain a strong and healthy balance sheet and to prepare the organisation to maximise the uplift in the cycle that will inevitably follow.

“We are focused on achieving operational excellence in RBPlat’s core business of mining at BRPM, with an increased focus on improving safety, increasing RBPlat’s Merensky contribution, productivity improvements, grade control and strict cost management.

“With the persisting weak PGMs markets, we will be closely monitoring business expenditure and expenditure patterns in order to maintain a healthy balance sheet and to preserve cash in the business through an even more enhanced focus,” the company says.