LONDON (Alliance News) - Aquarius Platinum Ltd on Tuesday said lower platinum group metal prices significantly hit its results in the first half of its financial year as the miner reported a steep drop in revenue and a wider pretax loss.
Aquarius reported a USD84.2 million pretax loss in the six months to December 31, widening from a USD56.4 million loss a year earlier, as a rise in production failed to offset price falls, leading revenue to tumble to USD78.3 million from USD113.3 million.
The pretax loss booked in the first half of the financial year is not far off the USD90.4 million pretax loss Aquarius reported for its last full financial year.
Operationally, Aquarius reported a rise in production to 182,911 platinum group metal ounces compared to 175,831 ounces last year, but that increase alongside falls in costs was not enough to counter significant drops in prices during the period.
Platinum group metal prices fell by 29% year-on-year to an average of USD825 per ounce from USD1,165 per ounce. However the rand price only decreased 13% in the period as weakness in the South African currency cushioned the price fall. In Zimbabwe, Aquarius said platinum group metal prices were "substantially lower", dropping 26% from last year.
Aquarius operates the Kroondal mine in South Africa and a nearby retreatment facility which processes tailings from various third-party operations in the vicinity, alongside the Mimosa mine in Zimbabwe, which together account for the majority of Aquarius' production.
The miner attempted to adjust to lower prices by reducing cash costs to USD83.0 million in the first half compared to USD97.0 million last year despite the increase in production, which mostly came from the Kroondal mine. Boosting the company's cost reduction effort was a weakening rand, which resulted in lower dollar costs.
"In order to ensure sustainability in this macro environment (dollar platinum group metal prices fell to the lowest level in more than a decade) further cost saving initiatives were implemented
at Kroondal, and specifically Mimosa, which management expects to result in unit costs reducing further going forward," said Chief Executive Jean Nel.
But none of the miner's operations made a profit in the first half. Kroondal, Mimosa and the retreatment facility all yielded pretax losses in the period. The Mimosa mine in Zimbabwe recorded the biggest pretax loss of USD46.0 million - mainly thanks to a USD42.0 million impairment - with Kroondal reporting a much smaller USD2.0 million loss.
Kroondal, the biggest producer, generated less revenue than costs in the period, reporting USD71.0 million in revenue which was wiped out by USD78.0 million in mining costs and exacerbated by a USD8.0 million cost in relation to depreciation and amortisation, resulting in a USD14.0 million gross loss.
Mimosa would have booked a small gross profit as it generated USD50.0 million in revenue and booked only USD46.0 million in mining costs in the period, but USD8.0 million in depreciation and amortisation costs pushed the mine to a USD4.0 million gross loss.
The miner's cash balance fell has fallen considerably in the past six months, standing at USD42.0 million at the end of December compared to USD196.0 million at the end of June. However, this was mainly due to the company's repurchase of USD125.0 million of convertible bonds that matured in December 2015 and because of foreign exchange losses amounting to USD19.0 million, the company said.
Aquarius shares were trading down 1.6% to 12.55 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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