The increase in the second quarter of this year’s net income was largely attributable to the significant increase in third-party chrome sales at the Crocodile River Mine
Platinum group metals (PGMs) miner Eastern Platinum’s (Eastplats’) net income attributable to equity shareholders increased to $7.7-million for the quarter ended June 30, compared with the $1.2-million reported for the second quarter of 2022.
Revenue for the second quarter increased to $36.6-million, from $20.5-million for the prior comparable period.
The miner attributes the higher net income to a significant increase in third-party chrome sales at the Crocodile River Mine (CRM), as well as lower overall operating costs in the quarter.
“We are pleased to show a strong financial and operating performance during the second quarter, which has been supported by chrome market prices. We continue to move towards a soft restart of the Zandfontein underground section of the CRM, and expect the initial processing of upper group two (UG2) chromitite ore to begin later this year,” CEO and president Wanjin Yang says.
Eastplats continues to produce chrome concentrate from its retreatment project at the company’s subsidiary Barplats Mines’ tailings facility, located at the CRM in South Africa.
About 94% of the company’s revenue for the second quarter was generated from chrome concentrate sales. Until July last year, this revenue was based on the Union Goal Offshore Solutions offtake agreement entered into between Barplats Mines and Union Goal.
Previously, and until the end of the second quarter of last year, the retreatment project produced revenue based on tons of material made available for processing by remining and processing the tailings, recovery of certain operational costs and allocation of the upfront cash payment for the offtake of chrome concentrate to Union Goal.
Although the Union Goal Offtake Agreement remains in place, Union Goal stopped taking shipments of chrome concentrate in June last year. Chrome revenue after this point has been generated only through third-party sales of chrome concentrate,” explains Eastplats.
The company also derives revenue from PGM concentrate sales under a PGMs offtake agreement with local miner Impala Platinum.
Eastplats produces PGMs from further processing tailings material following the production of chrome concentrates.
“While PGM prices have decreased, chrome prices have increased, which has driven revenue growth and gross margin improvement for the company. Chrome sales however are expected to wind down for the remainder of this year and into early next year as the retreatment project approaches its completion date.
“When that occurs, the PGM Circuit D and PGM Main Circuit B (collectively, the PGM Circuits) will become the main source of revenue as Eastplats executes its soft restart of the Zandfontein underground section of the CRM by ramping up production as capital availability permits.”
Care and maintenance with respect to the underground portion of the CRM will continue while Eastplats continues to raise additional funds to support the full reopening of underground operations.
Eastplats completed a life-of-mine study and underground mine design for Zandfontein in May last year, and the board supported carrying out the Zandfontein underground restart business plan, subject to final evaluation and funding arrangements.