Aquarius 'drags heels' on Zim

HARARE - London Stock Exchange-listed Aquarius Platinum (Aquarius) says it will decide on further investing in its Zimbabwean unit Mimosa Mining Company (Private) Limited (Mimosa) around 2015 to 16.

While the group’s chief executive Jean Nel did not comment explicitly on the implementation of Mimosa’s indigenisation plan, the unit would require $80 million over a three-year period.

He said, in their June 2013 year end financials, failure to reinvest in the local platinum group metals (PGMs) producer “would mean that its mine would be exhausted in about six years’ time.”

This comes as early this year Zimbabwe approved Mimosa empowerment proposal in line with the country’s indigenisation policy — compelling foreigners to cede 51 percent shareholding to black locals.

Meanwhile, Aquarius narrowed its losses to $61 million during the year under review from $154 million incurred in prior comparable period on the back of increased production at Mimosa.

The group — fourth largest platinum producer in the world — co-owns Mimosa with South African Impala Platinum Holdings in a 50-50 percent joint venture.

During the period under review, the Zimbabwe unit — led by executive chairman Winston Chitando increased production by seven percent to 2 412 metric tonnes.

Volumes processed went up two percent to 2 381 metric tonnes.

Nel said “Mimosa operated very well during the year, meeting most of its production targets.”

“However, the Zimbabwean political and regulatory environment remained challenging for all mining companies operating in the country,” he said.

The group’s revenue fell 24 percent to $371 million from $486 million in the previous comparable period.

It took an impairment charge of $226 million against the carrying value of its mining assets.

Attributable production, excluding operations on care and maintenance, rose 13 percent to 325,103 platinum group metal (PGM) ounces for the full year.

Nel noted that it was a financial year of two differing halves, but despite ending the period on a high note, said there was work to be done.

“The year under review was exceptionally challenging for Aquarius, a year in which we had to close loss making mines, face disruptive industrial action, implement an owner-operator model at Kroondal and revise the hanging wall support regime,” he said.

Nel added that the company had to contend with on-going regulatory uncertainty in an environment in which metal prices continued to materially underperform consensus forecast.

“That said, we have learnt much during these difficult times and have emerged as a leaner and more focussed business, fully intent on continuing the positive momentum into the New Year. As we expect the difficult operating conditions and low metal prices to continue in the new financial year, our focus will remain on improving operational performance and cash generation,” said Nel.

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