Aquarius Platinum, the world’s fourth-largest primary platinum producer, said it may shut its Blue Ridge mine in South Africa for up to seven months to revamp it following the death of two miners last month.
The company, which owns 50-percent of the mine, warned that production from Blue Ridge for the 2011 financial year will be substantially lower than guided if the revised business plan is approved by shareholders.
Lower prices for precious metals on a rand basis and the ongoing focus on safer mining means the mine will need work which will likely run for a 10 to 12 month period, the company said.
Two accidents at Blue Ridge in June resulted in the death of two miners and led the company earlier this month to cut its output target at the mine for FY2011 by a fifth to about 80,000 PGM (platinum group metal) ounces.
The company announced the review alongside its fourth-quarter production figures.
The London-listed shares of Aquarius were down 3.2 percent at 0738 GMT, underperforming a 0.4 percent fall in the UK mining index.
However, Dominic O’Kane, an analyst at Liberum Capital, said Aquarius is still very cheap relative to its PGM peers even after adjusting for production losses.
Shares in Aquarius have fallen 16 percent this month. The company’s current year has started badly too with an accident at another South African mine — Marikana, a 50:50 joint venture with Anglo Platinum (AMSJ.J), killing five miners this month.
It expects unit costs to rise 5 percent as a result of interim safety measures. [ID:nLDE6660A0] [ID:nLDE6600AR]
Q4 Production
The company said on Thursday that its output rose to 110,474 PGM ounces in the three months to end June from 98,258 ounces in the year-earlier period. Its production grew 7 percent from the preceding quarter helped by the restart of the Everest mine.
Panmure Gordon had expected the miner’s fourth-quarter production to rise to 114,000 ounces. Aquarius had guided that production in the quarter would be in line with the second quarter’s 112,359 ounces.
The company said average PGM prices in dollars improved quarter-on-quarter with platinum up 5 percent, rhodium up 5 percent and palladium up 12 pct, against a backdrop of continued rand strength.
The company will release its full-year results on Aug. 12.
Liberum Capital called the fourth-quarter production figures creditable and estimates full-year EBITDA of $159 million, up from the $7 million posted the previous year, mainly due to higher metal prices.