Platinum Australia Limited (PLA) advised that the mining contractor, JIC Mining Services Limited, obtained an interdict requiring all employees engaging in unprotected industrial action to return to work or face dismissal. The employees did not return to work and as a result ~85% of the JIC workforce has been dismissed. JIC has commenced the process of re-employing some of the workforce, however PLA anticipates that a significant number will not be re-employed as the number of employees which were taken over by JIC from the previous mining contractor, Redpath Mining Ltd, exceeds that required by JIC. A number of new skilled workers will also be recruited as part of this process. Limited underground mining continued during the industrial action, using those JIC employees who did not participate in the industrial action. The processing plant has not been affected by the industrial action of the JIC employees and continued to treat chrome tailings over the last week.
PLA anticipates that production from underground will ramp up to previous levels over the next few weeks as JIC reemploys some of the previous workforce and employs new workers to replace some of those not re-employed. We adjusted our production estimates last week, to account for the industrial action, to 30kt throughput for the December quarter. We therefore will not be adjusting our estimates further. In our view, the industrial action performed by the mining contractor employees could have caused significant cash flow problems for PLA, had the company not undertaken an equity raising earlier this month. The equity raising should still produce a sufficient cash buffer to absorb the losses associated with the latest setback. 12 Month Target Price: $1.10 Recommendation: Hold
PLA Price at posting:
56.0¢ Sentiment: Buy Disclosure: Held
