Royal Bafokeng Platinum (RBPlat) had hit a snag at the R11 billion Styldrift I Project in the North West following logistical constraints that would delay the project by six months, it said yesterday.
The company told the market the project was now 78 days behind schedule and the main shaft, which was scheduled for the first quarter of 2015, would now be commissioned in the second quarter.
“The project is currently 78 days behind schedule on the critical path, of which 52 days were lost during the third quarter [and] 26 at the end of the 2014 half year,” it said.
Production ramp-up was now scheduled to begin in the first quarter of 2016, compared with the third quarter as previously envisaged. As a result of the delays, steady state would now be achieved in the first quarter of 2019, it said.
The capital cost of the project remained R11.014bn as the impact of the delayed main shaft commissioning and start of ramp-up was expected to be absorbed by funds from savings and contingency.
The delays were a result of services shaft hoisting constraints, poor ground conditions in the main shaft and an accident in July in which an acetylene bottle fell down the services shaft. “The services shaft hoisting capacity has been identified as a key constraint with regards to underground construction activities,” the company said.
The services shaft provided all logistical support from underground development and construction work on 600, 642 and 708 levels, including rock hoisting, transportation of workers and material, and all services during the period the main shaft is being equipped.
“Detailed technical analysis has highlighted that this constraint will effectively limit the development of key infrastructure required for the commissioning of the main shaft and the start of production ramp-up,” RBPlat said.
Capital expenditure for the quarter was R264.7 million. It forecast that total expenditure for the project in the 2014 financial year would be R1.3bn including the concentrator project, contingency and escalation. Expenditure to date for the year is R419m, 32 percent lower than planned.
At the end of the quarter under review the project to date commitment was R4.347bn, with expenditure to date of R3.403bn. The project is 48.2 percent complete, behind the current plan of 51.8 percent.
The later timing of the Styldrift ramp-up allowed for additional Merensky and UG2 production from South shaft during 2018, which mitigates the effects of the delayed ramp-up to 120 000 ounces.
RBPlat signed a long-term wage agreement in July after being unscathed by the five-month industrial action that hit the world’s three major producers this year.
As part of the overall employee home ownership scheme, RBPlat announced a R2.8bn investment towards the provision of phase 2 of the scheme, which will involve the construction of 3 100 houses over the next five years.
These homes will range from 80m² to 360m² in size and cater for diverse needs and affordability of all its employees. In the first phase of the housing project 422 housing units were completed last month.
Shares RBPlat dropped 3.51 percent to end at R58.75 on the JSE yesterday, just off the low of the day.