Aquarius Platinum’s share price fell to a fresh one-year closing low on the JSE on Friday, taking the losses in the stock to 45.03% since the start of the month, as global growth concerns took their toll on the platinum miner and the sector in general.
Andrew Dittbener, senior investment manager at Cannon Assets Management, attributed the steep fall in the share price to a number of factors? which include industry wide challenges.
“Precious metal companies have been sold down to depressed levels over recent months and are beginning to look attractive. Concerns around global growth and its implications for platinum demand has resulted in deflated platinum prices,” Dittbener said.
Other challenges the industry faces include safety stoppages - rising operational costs and labour inefficiencies. He said the recent Aquarius quarterly results, its Zimbabwe exposure and the fire at Mimosa had added to the negative sentiment surrounding the company contributing significantly to the recent selloff in the stock.
The platinum miner, which is also listed in London, recently posted a 14% decrease in production to 215,453 platinum group metals (PMG) in its interim period, citing safety stoppages and rising production costs.
Justin Froneman, PGM equities and commodity analyst at SBG Securities, said the stock had suffered after continued operational challenges and the company’s exposure to the current rand PGM basket price.
Furthermore, concerns regarding the state of the PGM commodity fundamentals linger given platinum’s exposure to Europe and broad based global macro economic concerns.
“Aquarius’ London listing has also likely enhanced the stock’s exposure to price volatility,” he said.
Over the long-term however, he believes the PGM fundamentals appear attractive supported by an ever strengthening legislative demand underpin and likely platinum supply delivery issues.
The platinum index is down 12.35% since the beginning of this month. - I-Net Bridge