By Esha Vaish
Feb 7 Aquarius Platinum Ltd, the world's
fourth-biggest platinum miner, reported a lower half-year loss
as a rise in output from its Kroondal mine in South Africa
lessened the impact of a drop in prices of platinum group metals
Aquarius, which operates mainly in the strike-prone South
African platinum belt, reported a headline loss of $22 million
for the half year ended Dec. 31, down from $56 million in the
same period a year earlier.
Revenue slipped 2 percent to $113 million, while
attributable production increased 7 percent to 168,014 PGM
ounces. PGM metals include palladium, iridium and other metals.
The average U.S dollar PGM basket price dropped 5 percent in
the half-year from the same period a year earlier, Aquarius
said, while the rand basket price rose 13 percent as the South
African currency weakened.
The company said it was concerned that dollar-denominated
metal prices fell despite a primary deficit in PGM metal markets
during 2013, which is forecast to increase in 2014.
Aquarius reported revenue of $106 million from Kroondal - a
venture with Anglo American Platinum in the northwest
province of South Africa.
"They are doing everything they can at Kroondal, which is an
amazing operating performance, if we compare that to the rest of
the Bushveld especially," Nomura Equity Research analyst Tyler
Broda told Reuters.
The world's top three platinum miners -- Anglo American
Platinum (Amplats), Impala Platinum Holdings Ltd and
Lonmin Plc -- have interests in South Africa's Bushveld
complex, the world's richest reserves of PGMs.
The three miners are trying to hammer out wage agreements
with South Africa's largest labour body, the Association of
Mineworkers and Construction Union (AMCU), to end a two-week
strike that the country's Chamber of Mines says is costing the
industry about $18 million a day in revenue.
AMCU members walked out at Amplats, Impala and Lonmin on
London-listed Aquarius Platinum was largely shielded from
the strike as it signed a one-year agreement with the National
Union of Mineworkers last June. The company said in January that
it expected the strike at other miners to help it post higher
revenue and better margins.
"Having already reached a wage agreement at Kroondal,
Aquarius may benefit from production disruptions at the major
producers should they result in higher PGM price in the short
term," BMO Capital Markets analyst Edward Sterck said in a note.
UNCERTAINTY IN ZIMBABWE
Aquarius Platinum raised concerns last month about its
Mimosa mine in Zimbabwe, as proposed tax changes and regulatory
uncertainty had left it unable to plan future production levels
and capital allocation.
Zimbabwe's platinum sector has largely been an attractive
zone for foreign miners due to its current low tax environment.
However, foreign miners are jittery about the looming threat
of President Robert Mugabe's controversial indigenisation policy
and additional taxes proposed in the 2014 budget.
"The implementation of further taxes would have a
significant negative impact on the profitability and cash flows
of the entire Zimbabwean platinum sector, particularly in the
current low price environment," the company said.
Analysts also raised concerns about Aquarius Platinum's
ability to pay out a $300 million convertible loan due in 2015.
"Our concerns remain as to whether the operational
improvements alone are sufficient to warrant the refinancing of
the $300 million convertible which falls due at the end of next
year, while the platinum pricing environment remains weak,"
Investec Securities analysts said in a note to clients.
The company had a cash balance of $83 million at the end of
Aquarius Platinum's shares were largely unchanged at 39.25
pence at 1042 GMT on the London Stock Exchange on Friday.