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Tagged with: Aquarius Platinum

Feb 2002 - Aquarius Platinum

Aquarius Platinum Ltd (AQP) – A Buying Opportunity based on potentially significant profit growth

  • The share price of AQP has drifted sideways up to about 900c for most of the past year since January 2001, despite a number of very positive fundamental improvements amidst ongoing uncertainty over Russian deliveries impacting on the pge prices, especially platinum.
  • During 2001, AQP increased the holding in its main operation (Kroondal) from 45% to 95%, and In mid-2001 upgraded the Kroondal mill by 50% by installing a regrind circuit, with production attaining that higher level before December 2001. The regrind circuit also expected recoveries to improve by about 10%. •
  • The increased holding in Kroondal was made using a placement and some Rand-denominated loans (about R629m) which with the 50% fall in the Rand against the A$ and US$ during 2001 reduced the loan by approximately one-third, from US$79m to US$52m. Operational costs have similarly fallen with the rand’s value, enhancing profitability too.
  • Marikana has started construction, and could be in production by very late 2002, while the more profitable Everest South is still in feasibility study.

Oct 2002 - Aquarius Platinum

Aquarius Platinum Ltd – Quadrupling Production to 135,000ozpa by June 2003 at its Zimbabwean Mimosa operation

  • Aquarius acquired a 50% interest effective from 1 July 2002 in Zimasco Consolidated Enterprises Platinum Ltd, who own 100% of the Mimosa Platinum operation in the Wedza complex of The Great Dyke in Southern Zimbabwe for 6.86m AQP shares at GBP3.89/share or GBP26.7m (approximately A$74m).
  • The move is strategic with Mimosa having an expected life of far in excess of 30 years, currently quadrupling its production to about 135,000ozpa of PGE, and being one of the lowest cost platinum producers in the world.
  • In our opinion, after visiting the Mimosa operation in July 2002, the expansion should be achievable and if anything be conservative. Further upside potential appears possible in costs, recoveries, and throughput in addition to the gravity oxide testing, following up historic granite riffle tables that recovered Pt in 1926.

May 2003 - Aquarius Platinum

Aquarius Platinum Ltd – Overcoming its Operational Issues

  • Aquarius’ share price has more than halved in the past year to a low of A$5.00 due to the Rand’s strength, and lower non-Pt PGE prices, while possibly overreacting to BEE (Black Economic Empowerment), the expected Money Bill’s royalty rates, the perceived forex exposure/money pipeline (due to accounting the sale of pges 3 months before they occur, and booking the difference), Zimbabwe’s financial influence on Mimosa, and operational restrictions at Kroondal and Marikana.
  • The strengthening Rand is materially increasing the costs on the South African operations, (a R125/t cash cost at Kroondal becomes US$17.90/t at ZAR7/US$, compared to US$13.90/t at ZAR9/US$). The Rand corrected slightly to 7.5/US$ on Friday 2 May, but remains volatile as the US$ continues to weaken against the Euro (reputedly from the oil nations switching currency, and the US financing Iraq)
  • The operational restrictions being encountered by Kroondal in the form of potholes and other geological disturbances were being rectified during the March Qtr 2003, since face availability had risen to over 80% on one of the shafts in February, while only 67% is required to attain a 250,000tpm throughput rate.
  • Marikana is being commissioned on low recovery oxide and transition ore for the period to May 2003 when it is expected to begin increasing its blend of sulphide to about 75% by September 2003, with production gradually building up to an expected 130,000ozpa 4E, and possibly an expanded 160,000ozpa.

Sep 2003 - ZIM and AQP

ZIM - Still A Spec Buy, AQP - Bid Coming ?

  • This comment contains 3 sections, namely Impala’s comments, Zimplats and Aquarius. Impala’s comments The Implats press release that accompanied their year end results last Thursday (28 August), had a few pointers as to what may happen in the future to AQP and ZIM, namely :
  • There still could be another bid for ZIM or even one for Aquarius Since, according to the press release (available on IMP’s website) Continued rationalisation of structure Implats has continued to rationalise its corporate structure as the opportunity has arisen. The interests in Mimosa and Zimplats have been consolidated for a full year for the first time. Although currently these contributions are small, as Implats’ interest in Zimplats rises and as expansions at both these operations progress, these are expected to become more significant in the future.
  • In the interests of simplifying operational structures and creating clarity for investors, further changes can be expected in the near and medium term, if an analysis of these opportunities proves to be value-enhancing to shareholders.
  • If you had any doubts about ZIM’s actual worth, you only have to read the first paragraph of this section, namely : (non italics are our inserted comments) Although currently these contributions are small, as Implats’ interest in Zimplats rises and as expansions at both these operations progress (Mimosa and Zimplats), these are expected to become more significant in the future. (note : AQP has the other 50% of Mimosa)

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