JOHANNESBURG (miningweekly.com) – Fourth-largest platinum producer Aquarius Platinum did not expect industry-wide cost pressures to subside and warned of continued metal price volatility.
In what CEO Jean Nel described as ‘the most difficult period in the history of the company’, Aquarius posted decreased revenue for the half year ended December 31, 2012, of $179-million– down 29% from $252-million in the first half of 2012.
He said during a results advisory on Friday that the company did not plan to restart operations at Marikana and Everest operations, following their placement into care and maintenance last year.
“For the duration of the current downturn, we want to minimise our costs but maintain the assets, and these operations are unprofitable at current prices,” said Nel.
Production from the company’s Zimbabwe-based Mimosa mine somewhat bolstered the company’s otherwise downward-trending results by maintaining capacity production but struggled with an ‘unacceptably high’ cost upsurge of 17% to $863/oz.
Group attributable production decreased by a similar margin to revenue, falling 27% from 215 453 oz in the 2012 first-half to 156 787 oz in the first half of 2013.
Costs at Mimosa included increased surface lease fees of $1.3-million, a consumable inventory write-down of $2.2-million, the rebuilding of a $1.4-million ore stockpile following a fire last year and a higher use of reagents owing to poor-quality reagents purchased from China, which amounted to some $1.2-million.
Nel said that, from an operational perspective, cost inflation at Mimosa usually followed the same trend as rising cost inflation in South Africa, from which most consumables – such as diesel – were imported.
On the labour front, the company said that, while it would enter the wage negotiation season in South Africa with a good working relationship with union representatives, it remained vulnerable to the external industrial relations environment.
Nel added that Aquarius’ focus in the second half of the financial year would linger on restoring operation credibility in a difficult environment, with cash preservation remaining paramount.
“We are making a bit of money, but we are not printing cash, by any means,” he commented.
He added that, from a platinum group-metals supply and demand perspective, both platinum and palladium would move into primary supply deficit during 2013, while significant further short-term price increases were unlikely.