UPDATE 1-Aquarius lifts Q1 output, posts loss on metal prices

* Aquarius posts Q1 net loss of $21.5 million

* Attributable production up 17 percent

* Expects further cost reductions in Q2

(Adds details, CEO)

JOHANNESBURG, Oct 28 (Reuters) - South Africa-focused metals miner Aquarius Platinum (AQPJ.J) (AQP.L)(AQP.AX) posted a 17-percent rise in first-quarter output on Tuesday yet fell to a net loss of $21.5 million because of a drop in metal prices.

Aquarius said it had shut production at the No. 2 shaft at its Marikana mine, blaming the closure on a drop in prices, which fell to levels last seen in 2006.

"Just as profits rose very sharply in Q3 and Q4 of FY 2008 at the time of the electricity crisis, they have fallen as sharply... due to ongoing crises in financial markets," said Chief Executive Officer Stuart Murray.

Platinum hit a record high of $2,290 an ounce in March during a power shortage in main producer South Africa, which disrupted mining and triggered supply worries.

Prices for the metal, which is mainly used in making autocatalysts used in vehicles to help clean exhaust emissions, have fallen to near five-year lows after automakers cut output.

For the quarter to September, Aquarius' revenue was $178 million, but was hit by the negative impact of a $71.9 million sales adjustment due to significantly weaker PGM (platinum group metals) prices.

Aquarius said accounting standards meant that revenue has to be calculated in the month of concentrate delivery at the prevailing PGM spot price and foreign exchange rates.

Aquarius' shares were unchanged at 17 rand in Johannesburg as its platinum peers gained, lifting the platinum sector index .JPLAT by 5.58 percent.

On the brighter side, Aquarius said attributable production rose 17 percent to 128,366 platinum group metal ounces.

"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," Murray said.

The company, which operates in South Africa and Zimbabwe, said the second quarter would see further cost reductions on lower diesel, chemicals and steel prices, while production would rise further.

"In addition, dollar weakness is expected to provide some respite as the falling price of consumables starts to feed through to costs during the second quarter," the company said.

Most of Aquarius' operations are in South Africa, and it is listed on stock exchanges in Johannesburg, Sydney and London.

(Reporting by James Macharia; Editing by Jason Neely)