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May 20, 2010
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Aquarius Platinum sees 2011 output over 550,000 ozs

By
Reuters
Published
May 20, 2010


Aquarius Platinum's Kroondal site at night - Photo: Aquarius Platinum
By Julie Crust

LONDON (Reuters) - South Africa's Aquarius Platinum Ltd, the world's No. 4 platinum producer, expects its production to rise to more than 550,000 ounces in the next financial year helped by the recent restart of its Everest mine.

Chief Executive Stuart Murray told Reuters on Wednesday 19 May that he expects attributable production to reach about 430,000 platinum group metal (PGM) ounces in the year to end June 2010, from 456,000 in FY2009, and to over 550,000 ounces in FY2011.

Anglo Platinum, the world's top platinum producer, said on Monday 17 May that it expects to produce more than its previously forecast 2.5 million ounces of platinum this year.

Earlier this week, Aquarius Platinum announced that it restarted production at its Everest mine in South Africa's Mpumalanga province and that this will add about 8,000 ounces to attributable production this financial year.

Everest was mothballed in December 2008 after heavy rain led to subsidence problems and amid low rand-based metal prices.

Murray said that the rand-dollar exchange rate would have a bigger impact on its results than fluctuations in production.

"The impact of the rand on the dollar price will swing our earnings number around far more than a few thousand ounces either way," he said.

The strong rand has added to the pain of rising costs and labour facing South African miners. The South African rand slid about 1.8 percent against the dollar on Wednesday 19 May, but is still much stronger than it was a year ago. "It is unhelpful when the currency is as strong as it is ... but there is very little the South African authorities can do," Murray said.

Elsewhere, the company has had a few teething problems with its Blue Ridge mine that resulted in some analysts reducing production forecasts after the group's last quarterly results.

"A fatal accident in December has showed up a flaw in some of the original methodology of the mine," Murray said.

The company will take a more cautious approach to mining at Blue Ridge that will increase safety but also reduce grades and ounces produced and slow down the planned ramp up.

OUTLOOK

Aquarius had about $381 million of cash at the end of March and Murray said he was is looking at spending a large part of it on acquisitions or opportunities such as a joint venture.

"But the equity markets, particularly in the junior space, have got a little ahead of themselves based on these dollar prices and finding value in a listed equity junior is pretty hard to come by," he said.

He added that the biggest threat to mining is resource nationalism.

"If you go on raising taxes and raising royalties you will destroy investment and hence jobs. Mining is a pretty easy target because you can't pick up the asset and leave."

Miners worldwide are facing an increasing number of fiscal pressures from governments with Tanzania planning to raise royalties paid on minerals and Australia proposing a new mining tax.

Last month, Aquarius announced a jump in profit helped by higher prices for platinum group metals that have been boosted by the recent launch of U.S. exchange traded funds (ETFs) for platinum and palladium.

"What they (ETFs) have done is bring access to precious metals for many different types of investors. As a miner we would like to know to what extent is this long-term investment or speculation.

"If it (ETF demand) is at the expense of jewellery then maybe it's a double edged sword."

Overall, he noted that the group's core markets are still a long way off of 2008 levels.

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