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Aquarius actions puts group on stronger footing

24 Jul 2012

Aquarius Platinum says the suspension of two mines has left it capable of weathering the drop in platinum prices and demand.

Aquarius has in recent weeks suspended its Everest mine and the Marikana mine it shares with Anglo American Platinum (Amplats) because of weak market conditions and operational problems. This has left it the Kroondal mine in SA and the Mimosa operation in Zimbabwe.

Amplats said on Monday it is in talks with Aquarius about Kroondal‚ which is shared between the two companies. Amplats will not tolerate loss making operations in an oversupplied market‚ its acting CEO‚ Bongani Nqwababa said.

However‚ Aquarius feels the operations it has left open will suffice.

"We are confident that the new operational configuration of AQPSA (Aquarius Platinum South Africa) will enable the company to withstand the continuing downturn‚" CEO Stuart Murray said on Monday.

"We expect that production from Kroondal will continue to improve‚ complemented as always by robust production from Mimosa and the modest margin contribution from out tailings operations‚" he said.

Kroondal generated a total of 82‚212oz of platinum group metals in the quarter to end-June‚ of which half was attributable to Aquarius. The mine posted a negative cash margin of 24%.

Mimosa‚ which is shared with Impala Platinum‚ produced a total 54‚588oz of PGMs and it had a positive cash margin of 51%.

"The numbers are my friend. If the numbers clearly indicate that we are making losses and our debt is increasing there would be no reason to keep the operation open‚" Nqwababa said.

Contract mining will be replaced by owner mining at Kroondal in an effort to contain costs and have a firmer handle on the operations. This is a difficult and costly exercise.

Cash reserves in Aquarius of $180m were "sufficient" for the company to continue operating its mines over the next year‚ Murray said.

Aquarius has made a bid to buy the southern portion of the Booysendal property contiguous to Everst from Northam. The deal is subject to a number of conditions.

"The funding of this asset acquisition will be considered if and when the need arises‚" Murray said.

Source: I-Net Bridge

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