Aquarius posts flat Q2 production, battered PGM basket prices

JOHANNESBURG (miningweekly.com) – Attributable platinum production from Aquarius’s operating mines increased by a marginal 0.5% in the three months ended December 31, to 89 399 oz, despite production headwinds at the group’s Kroondal mine and a decrease in material processed at the Platinum Mile tailings operation.

The company on Thursday reported that output at the North West-based Kroondal operation increased 3% to 57 421 oz on the prior year’s comparable quarter, despite production challenges at the Simunye and Kopaneng shafts.

Production at the mine reflected a 4% quarter-on-quarter uptick and marked the twelfth consecutive production quarter in which the mine produced more than 105 000 oz.

Unit costs, meanwhile, declined by a marginal 0.1% quarter-on-quarter to R9 112/oz, with operating costs contained below inflationary levels of about 6% for the third consecutive year.

Attributable output at Aquarius’s 50%-owned Mimosa mine, in Zimbabwe, narrowed marginally quarter-on-quarter to 29 010 oz, while headgrade improved to 6.36 g/t and consistent recoveries of 78.6% were retained.

This was despite volumes processed having dipped by 5% to 638 652 t as a result of plant stoppages associated with the rainy season, which resulted in frequent power dips, as well as a breakdown of the plant mill motor.

Unit cash costs narrowed 3% quarter-on-quarter to $772/oz in response to sharply lower metal prices and the implementation of several cost-cutting initiatives during the quarter.

Mimosa, meanwhile, continued to interact with the Ministry of Indigenisation and Ministry of Mines to work towards a sustainable solution in relation to Zimbabwe’s proposed indigenisation policy.

Aquarius CEO Jean Nel said on Thursday that both Kroondal and Mimosa had produced ahead of guidance and at reduced costs during the quarter.

“The fact that both Kroondal and Mimosa’s unit costs are lower today than three years ago, despite steep increases in labour, electricity and other costs, is testimony to excellent operational management,” he noted in a results statement.

Nel, however, lamented the effect of lower platinum group metals (PGM) prices over the quarter, which saw the price of platinum falling 1.2% to $877/oz and palladium moving down 13.8% to $563/oz.

Kroondal’s PGM basket price decreased 27% quarter-on-quarter to $797/oz for the three months, while Mimosa’s basket price narrowed 26% to $818/oz over the same period.

“To ensure sustainability in this macro environment, in which dollar PGM prices fell to the lowest level in more than a decade, further cost saving initiatives were implemented at Kroondal, and specifically Mimosa, which management expects to result in unit costs reducing further going forward,” he maintained.

Looking to the group’s 91.47%-owned Platinum Mile operation, adjacent to the Kroondal mine, material processed over the quarter decreased 4% to 1.12-million tons, while headgrade decreased to 0.57 g/t and recoveries dipped to 15%.

This led to lower PGM production of 2 968 oz for the quarter.

Updating the market on the proposed amalgamation between Aquarius and Sibanye Gold, following the approval by Aquarius shareholders on January 18, Nel said the company continued to cooperate with Sibanye in fulfilling the remaining conditions precedent to the deal.