Johannesburg - Eastern Platinum (Eastplats) yesterday announced that its losses in the six months ended June had widened to 29c a share from 5c a share during the period.
The company blamed cost escalations and said it would continue to review its strategy.
Eastplats, which plans to sell the Crocodile River Mine (CRM) to Hebei Zhongheng Tianda Platinum, said it was in breach of provisions of the law due to the buyout of its empowerment partner minority interest.
It said it was now working on plans to find a new partner.
“Due to the buy-out of the BEE (Black Economic Empowerment) partners’ minority interest, the company is currently in breach of the provisions of all of its mining rights and certain provisions of the Mineral & Petroleum Resources Development Act (MPRDA),” the company said, adding that under section 93 of the MPRDA, the Department of Mineral Resources (DMR) may formally order the company to rectify this non-compliance.
“Failure to rectify the non-compliance will ultimately lead to the minister (Mosebenzi Zwane) cancelling the company’s mining rights under section 47 of the MPRDA. The Company has met with DMR and is working proactively to introduce another BEE partner into the Company’s activities,” the company said.
The company said the proposed sale of the Crocodile River Mine and the buyout of the BEE minority interest in South African assets by former management had dramatically changed its strategic footprint in the country
Following the dramatic ousting of its directors by dissident shareholders in July the company announced the election of a new board of directors and changes in management of the company.
It decided to fix the number of directors to six.
It said the new management and board continued to review the Crocodile River Mine Purchase agreement, the BEE buyout agreement, the payment to certain minority interest holders and all related transactions conducted by the former management of the company and would adopt a new strategy.
Last week Eastplats said it had reached agreement with certain holders of minority interests to buy their interests in all the company’s projects including the CRM.
The company believed that, given the continued stagnation of the global economy and the European car market, which consumed approximately 50 percent of South Africa’s platinum production, the industry would have to contend with a continuation of stagnant Platinum Group Metals (PGM) prices which are hovering near 10-year lows, despite indications of some meaningful production cuts from the larger PGM producers.
At the same time, the South African PGM industry continued to experience a number of adverse economic factors, particularly ongoing labour unrest, operating cost inflation, and concerns with respect to reliable power delivery.
Eastplats shares remained unchanged at R9.95 yesterday.
BUSINESS REPORT