The Beaver has got to be well placed for future mining, but will...

The Beaver has got to be well placed for future mining, but will Anglo just take it over at these prices?:

http://www.miningweekly.com/article.php?a_id=146166
Aquarius posts loss, closes shaft as ‘shine comes off’ PGM basket
By: Esmarie Swanepoel
Published on 28th October 2008
Updated 26 minutes ago
JOHANNESBURG (miningweekly.com) - Platinum producer Aquarius Platinum reported a September quarter loss of $21,5-million, after platinum-group metal (PGM) prices fell by more than 50% in the three-month period.

CEO Stuart Murray said on Tuesday that production and costs improvements could not offset shrinking revenue and negative price revenue adjustments, attributable to the “significant” fall in the prices of the metals the company produced.

“During the quarter, the shine came off our basket of metals, with prices falling back to levels last seen in 2006 and earlier,” Murray said.

Against this background, he also announced that the company had placed its No. 2 shaft at Marikana, on the Western Limb of South Africa’s Bushveld Complex, on care-and-maintenance.

Aquarius redeployed the skills and underground equipment to other positive margin generating areas at Marikana and its flagship project Kroondal.

During the period under review, platinum closed 52% lower at $1 004/oz, rhodium 58% lower at $4 050/oz, palladium 57% lower at $199/oz, while gold fell by 3% to $894/oz. The average PGM basket prices for the group fell in both Rand and Dollar terms, down 23% to R13,049 per 4PGE ounce and 23% to $1 684 per 4PGE ounce, respectively.

Falling prices, which had continued during October this year, would continue to impact the financial performance of the group, the group warned.

Aquarius reported that revenue had been $178-million before the impact of a negative $71,9-million sales adjustment, owing to the weaker PGM prices.

Attributable production increased by 17% to 128 366 oz, and the company stated that all mines recorded an increase in output, with the exception of the chromite tailings retreatment plant operations, where a shortfall of 140 oz was recorded.

Mine operations that recorded the most significant production increase were Marikana, which was up 37% from the previous quarter, and Kroondal, which was up 22% from the previous quarter.

“Despite all the gloom in the sector, it is encouraging that the production turnaround we required has started to deliver, with increases in production and decreases in unit costs across most of our operations, despite the inflationary cost pressures experienced over the last two quarters in particular,” said Murray.

At operations n South Africa, labour costs rose by 21%, diesel costs increased by 17%, chemical costs rose by 60% and electricity costs also rose by 60%.

“Labour costs remain under pressure owing to the increasing competition for critical skills in the mining industry, as well as inflation driven wage demands. These increases are annual, but came into effect during the first quarter, at the same time that labour complement increased.”

The company added that even though most input prices were market driven, management was constantly assessing options to reduce supplier prices through ongoing re-evaluation and retendering of primary consumables.

OUTLOOK
Aquarius said it expected tightening emissions standards in North America, Europe and Japan in 2009 and 2010 to increase PGM catalyst loadings in the medium-term, and that this, together with the need for replacement catalysts on ageing autos fleet, would offset and reduction due to declining sales of new vehicles.

Recessionary concerns highlighted by falling automotive sales dampened the outlook for autocatalyst sales.

However, Aquarius said that ongoing constraints in supply of PGMs had gone largely unnoticed with industry production likely to be considerably lower in the short and long-term, owing to ongoing power, cost, and labour issues.

Longer-term production would also suffer as expansions and new projects by junior and major miners were being delayed or scrapped altogether, Aquarius warned.

Aquarius stated that looking at the second quarter of 2009, it was anticipated that reductions in unit costs would be achieved again, as production increased further and falling prices for diesel, chemicals, and steel would start to flow through the cost base. “In addition, US dollar weakness is expected to provide some respite as the falling price of consumables starts to feed through to costs during the second quarter.”