Platinum and chrome explorer and producer Bauba Platinum’s new wash plant at the Moeijelijk chrome mine, in Limpopo, is producing at its planned throughput levels, boding well for the company to improve its profit margins, the JSE-listed firm reported on Friday, as it reported a half-year loss.
The new plant, which was commissioned and started production in November, has been producing according to its planned throughput levels since January, with spiral feed at about 35 000 t/m.
During November and December, when the plant was still in ramp-up phase, it produced about 29 000 t of chrome concentrate.
The wash plant enables Bauba to upgrade Moeijelijk’s run-of-mine (RoM) chrome ore saleable product into foundry, chemical and metallurgical grade concentrates for the Chinese market.
“Until the wash plant started production, Bauba was selling only 40 basis RoM, realising a significantly lower value than its concentrate basket value, which is heavily weighted towards speciality grade concentrates.
“Based on actual January and February 2019 sales, the current concentrate basket generated a weighted average free-on-truck (FoT) price that is significantly greater than the 40 basis RoM-equivalent that was sold previously,” CEO Nick van der Hoven commented in a statement.
He added that the January basket price did not include foundry sales, as the company was still gradually breaking into this market and foundry volumes were expected to improve over time.
“Based on current wash plant production and positive assay results, we are confident our target foundry sales will be achieved.”
Last month, Bauba entered into a foundry chrome commodity purchase contract with a foundry chrome trader and secured the sale of a minimum quantity of foundry grade chrome material over a four-month period.
The contract, together with Bauba’s existing offtake agreement, was expected to enhance future profit margins by increasing the value it received from premium speciality chrome ore concentrate sales, Van der Hoven indicated.
“These factors, in combination with a chrome market that has been improving and is currently trending upwards, ought to contribute positively towards Bauba’s full-year results,” he said.
Bauba’s interim performance was adversely impacted by administrative delays by the Department of Water and Sanitation in processing an amended water use licence and by the Department of Mineral Resources in approving an amendment to Moeijelijk’s environmental authorisation.
This resulted in an effective loss of two months of opencast production as the opencast operation had to ramp back up to planned production levels, as well as four months of concentrate sales owing to the delayed commissioning of the wash plant.
Bauba reported revenue of R90.36-million for the six-month period, compared with R115.24-million a year earlier. It posted a net loss of R9.75-million, compared with profit of R29.95-million in the comparative period.