By Brenton Cordeiro
Feb 8 (Reuters) - Aquarius Platinum reported a 24 percent drop in core profit for the first half,but said it was able to bring down costs by about a third,sending the miner's shares up as much as 10 percent.
Aquarius, the world's fourth largest platinum producer, saidprofitability at its mines was $22 million for the six monthsended Dec. 31, compared with $29 million a year earlier, due totough operating conditions at its South Africa mines and lowerplatinum prices.
Mining companies have struggled to maintain profitability ascosts rise, while platinum prices remain subdued due to reduceddemand from carmakers, the leading consumers of the white metalused in catalytic converters.
"... The continued depressed demand from European autoproducers and the substantial above-ground inventories renderssignificant further short-term price increases unlikely," ChiefExecutive Jean Nel said in a statement.
Aquarius said the total cash cost of production was $156million in the first half, down $80 million from a year earlier,due to lower production following the closure of its high-costmines Marikana and Everest last year.
The lower costs helped more than double its gross cashmargin to 13 percent from 6 percent.
Aquarius, however, added that despite operationalimprovements, cash generation at current spot prices remainedconstrained.
The mining industry in South Africa, the source of betweenthree-quarters and four-fifths of the world's platinum, was hitby a wave of strikes last year, some of which were accompaniedby deadly violence.
Soaring costs, labour unrest and falling production haveresulted in the closure of some mines, with more expected tofollow suit.
"The operations are tightened up and running efficientlyand, should the auto cycle keep improving in the years ahead,Aquarius will be able to consider re-opening mines," Citigroupanalyst Jon Bergtheil said in a note to clients.
Total production fell 20 percent to 308,954 ounces in thefirst half.
Shares of Aquarius were up 2 percent at 69.75 pence at 1000GMT on Friday on the London Stock Exchange. Its Australia-listedshares closed at A$1.075.
