Recent updates from Aquarius Platinum have been increasingly gloomy about the difficulties of operating in South Africa so it was no surprise when the platinum miner announced it had fallen into the red.
Loss before tax in the 12 months to the end of June was $189.0m versus a profit of $25.4m the year before, with the group taking a £95.0m hit on foreign exchange (FX) movements this time round, versus a £60.1m FX gain the year before.
Revenue slumped 29% to $485.4m from $682.9m, reflecting a 14% decline in the group's attributable production to 411,398 platinum group metals (PGM) ounces for the full year.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The average rand basket price achieved was flat year-on-year at just over 10,300 rand per PGM ounce.
Mine operating net cash flow plummeted by 85% to $26m from $176m the year before, and mine earnings before interest, tax, depreciation and amortisation fell in line with cash flow to $29m from $206m the year before.
Stuart Murray, Chief Executive Officer of Aquarius Platinum, gave his usual hard-bitten assessment of the current situation for players in the South African PGM industry, describing the year just gone as "an exceptionally challenging one". The general operating environment combined with the poor pricing conditions place the South African (SA) PGM sector under real pressure, in Murray's view.
"Company specific operational performance issues, a significant drop in the Rand price basket especially since February coupled with rising input costs in SA and Zimbabwe, poor labour relations at the primary mining contractor in SA, and unreasoned safety stoppages all combined to deliver an unfortunate operational and financial outcome for Aquarius," Murray said.
Aquarius is currently in cash conservation mode, having mothballed its Everest and Marikana mines. The group's cash balance at the end of the reporting period was $180m, down from $328m a year earlier. Aquarius believes its present cash reserves are sufficient to manage its operating mines for the next twelve months based on present market dynamics but points out that it will need to secure additional funding if it is required to conclude the acquisition of mineral rights to Booysendal South, an area adjacent to Aquarius's Everest mine.
Aquarius paid a $15m deposit during the reporting period on the proposed acquisition which is set to cost the company $179m in total. In noting the necessity for securing additional capital, Aquarius is taking advice on a number of options.
No dividend has been declared this year, whereas last year the company paid a divi of 8 cents.
"As the market recovers - and there is no reason to doubt that it will - Aquarius will be well placed to re-build its production profile," Murray claimed.
JH
-
Water companies blocked from using customer money to pay “undeserved” bonusesThe regulator has blocked three water companies from using billpayer money to pay £1.5 million in exec bonuses
-
Will the Bitcoin price hit $100,000?With Bitcoin prices trading just below $100,000, we explore whether the cryptocurrency can hit the milestone.
