[miningmx.com] — AQUARIUS Platinum, which shut down its Marikana
shaft earlier this week, would only return to profitability by 2014, according to an
analyst report.
RBC Capital Markets analyst Timothy Huff said in a client note the Marikana
shutdown was a first step for Aquarius towards curtailing cost production in a weak
pricing environment.
“We expect to see Aquarius perform at an operating loss level for at least a quarter
or two, until we see a recovery in PGM prices [ not expected], or further supply side
reaction from the broader sector,’ Huff said. “A secondary supply side response by
Aquarius could be the temporary closure of Everest South.’
The analyst said he expected Aquarius to surpass the 500,000 ounces production
mark when all operations are back in line in FY 2014 of 2015.
“However, we have reduced our production profile to account for no Marikana
production for the next fiscal year, as well as half of fiscal 2014,’ Huff said. “We
expect to see continued production out of the more profitable operations of
Kroondal, Mimosa and Platmile throughout the cycle.’
A concentration of production among the profitable mines should see unit costs
reduce from about $1,200/oz in FY12, down to the sub-$1,000/oz level by FY14.
“We have Aquarius remaining in a loss position for the coming quarter and into early
FY13. This view is consistent with our view that current PGM prices are well into the
industry cost curve and do not support sustainable profitability at all operations.
“However, we have Aquarius breaking even at the bottom line in FY13 and positive
earnings per share of $0.12/share forecast in FY14.’
