Johannesburg, South Africa — 18 June 2012 – Aquarius Platinum, which shut down its Marikana shaft last week, would only return to profitability by 2014, according to an analyst report.
Miningmx reports that RBC Capital Markets analyst Timothy Huff said in a client note that 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, or further supply side reaction from the broader sector,” Huff added. “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 were 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 US$1,200/oz in FY12, down to the sub-US$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,” Huff continued.
“However, we have Aquarius breaking even at the bottom line in FY13 and positive earnings per share of US$0.12/share forecast in FY14,” he said.
Source: Miningmx. For more information, click here.