The revenue of JSE- and TSX-listed platinum group metals (PGMs) miner Eastern Platinum (Eastplats) increased by 2.5% year-on-year to $20.5-million in the second quarter, taking year-to-date revenue to $37.9-million.
Mine operating income increased by 25.2%, or $900 000, year-on-year to $4.2-million in the second quarter, resulting in an improved gross margin of 20.3% in the period, up from 16.6% in the corresponding period in 2021.
For the first half, Eastplats’ mine operating income increased by $2.8-million (59.1%) to $7.6-million, resulting in an improved gross margin of 19.9% for the year to date from 13% in the first half of 2021.
The miner’s operating income improved by $2-million to reach a profit of $1-million in the first half of this year, compared with an operating income loss of $1-million recorded in the first half of 2021.
In the second quarter, net income attributable to equity shareholders was $1.2-million, equating to $0.01 a share; but is down from the $4.1-million, or $0.03 a share, of the corresponding period of 2021.
The second-quarter income was largely attributable to income tax recoveries in the period, while income in the second quarter of 2021 was lifted as a result of Eastplats receiving legal settlement income of $3.3-million to settle and dismiss certain outstanding lawsuits.
Nonetheless, Eastplats’ net income attributable to equity shareholders in the first half of the year increased from $3.3-million ($0.02 a share) in the first half of 2021, to $4.2-million ($0.03 a share).
This first half improvement in income attributable to equity shareholders is mainly attributable to the increased revenue and positive gross margins generated by remining and processing Eastplats’ tailings resources at the Crocodile River mine (CRM) to produce chrome concentrate and PGMs concentrate, respectively. It is also owing to income tax recoveries.
As at June 30, Eastplats held $16.1-million (current assets less current liabilities), and short-term cash resources of $6.4-million (consisting of cash, cash equivalents and short-term investments) – up from the $6.1-million held at the end of 2021.
Eastplats president and CEO Wanjin Yang says the company’s performance in the second quarter shows it is on the right path to continue its revenue growth and profitability improvements from the retreatment project and capacity increases from the PGM circuits.
In terms of production, the miner increased its PGMs concentrate production, from 539 t in the second quarter of 2021, to 1 868 t in the second quarter of this year. PGMs production for the year to date totals 2 747 t.
Eastplats also increased its chrome tailings feed in the second quarter, from 660 566 t in the second quarter of 2021, to 664 721 t; taking the first half production to 1.24-million tonnes. The grade of chrome concentrate also increased year-on-year from 38.5% in the second quarter of 2021, to 38.7% in the second quarter of this year.
Chrome concentrate in the second quarter totalled 169 839 t.
During the period under review, Eastplats continued its retreatment project at Barplats Mines’ tailings facility, located at the CRM.
The majority of the miner’s revenue (about 84% for the second quarter) was generated from the offtake agreement of chrome concentrate with Union Goal Offshore Solution, while the remaining amount of Eastplats’ revenue was from PGM concentrate sales to Impala Platinum.
Eastplats is also currently owed about $17-million from Union Goal in accounts receivable from processing and dispatching chrome concentrate, in addition to $6-million for chrome concentrate not yet invoiced.
The miner says payments against the outstanding receivable amounts from Union Goal have been slow despite repeated requests for a payment plan. Eastplats states that it is evaluating and communicating with Union Goal to determine an agreeable outcome.
A default on the money owed by Union Goal could have a significant impact not only on the instrument credit risk adjustments recorded to date but also on Eastplats’ liquidity as a whole.
The miner says any further delays in payment may require it to re-evaluate the fair value of the contract payable, re-evaluate the value of the contracts to the parties, and could lead to a renegotiation/change of the Union Goal contracts, including target completion dates for the enhancement programme.
Nonetheless, Eastplats says it still expects to receive all monies owed to it and will pursue all commercial options available to it to collect these amounts.
For the remainder of the year, Eastplats intends to operate and enhance the retreatment project and complete the enhancement programme for this project.
It also is focused on assessing the value for continued use of the chrome recovery plant after enhancement, operating and enhancing the PGM circuits and analyseingthe completed updated independent technical report on the CRM.
In addition, Eastplats intends to raise capital to restart Zandfontein underground operations at the CRM, complete the second phase of the tailings storage facility capital works programme and advance the Mareesburg project environmental work to complete the legal analysis on the environmental-impact assessment (EIA) and other environmental studies and amendments.
Also at the CRM, the miner is focussed on prospecting and assessing work in relation to the Zandfontein, Crocette and Spitzkop orebodies, as well as completing the EIA and assessment work regarding a vertical furnace and pelletiser of chrome concentrate.