| Fri 25 Jan 2008, 10:01 | | AQP - Aquarius Platinum - Change to underground mining regime |
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AQP
AQP
AQP - Aquarius Platinum - Change to underground mining regime
at the Everest Mine
Aquarius Platinum Limited
(Incorporated in Bermuda)
Registration Number: EC26290
JSE code: AQP
ISIN: BMG0440M1029
Friday 25 January 2008
Change to underground mining regime at the Everest Mine
Aquarius announces that the underground mining contractor (Shaft Sinkers Mining
(Pty) Limited `SSM`) at its South African subsidiary`s Everest Mine has
abandoned the mining contract due to industrial relations and financial issues.
With immediate effect, Aquarius Platinum (South Africa) (Pty) Limited `AQPSA`
has assumed management of the Everest Mine`s underground operations and the
management are implementing contingency plans to resume production at the mine
on 28th January 2008.
Background to the announcement
SSM were appointed in April 2005 to manage underground operations. In August
2007, Shaft Sinkers (Pty) Limited entered into a transaction to sell its
contract mining subsidiary SSM to JIC Mining Services (Pty) Limited `JIC`.
On return from the traditional Christmas and New Year break significant concerns
have arisen within the workforce of SSM in respect of the decision to sell the
Everest business to JIC. Employees of SSM have staged a series of go-slows and
unprotected strike actions resulting in significant production decline to a
level of around 50% of the pre-Christmas output. AQPSA has informed SSM of a
number of material breaches of contract and coupled with the industrial
relations climate the situation deteriorated to the point where SSM dismissed
very significant numbers of employees on 18 January 2008. This halted
production on the mine. As a result of this unfortunate situation and other
factors not fully disclosed to AQPSA it appears that the situation led to a
breakdown of the sale process between SSM and JIC in recent days.
On 24th January, AQPSA received notice from Shaft Sinkers that it was abandoning
the SSM contract because "After serious consideration of our obligations in
terms of the Everest Mine Contract (SSM) regret(s) to advise you that (having
regard to recent developments at the Everest Mine including the spate of strikes
and go-slows culminating in the dismissal of the entire workforce on 18 January)
we are unable to continue to discharge our obligations under the contract and
have been left with no alternative but to abandon the contract and hand over
operation of the Everest Mine to AQPSA."
As AQPSA realised that the mining contract would no longer transition smoothly
between SSM and JIC, the Board took the decision on receipt of SSM`s abandonment
letter to protect the Company`s interests and has as of 24 January 2008 entered
into an agreement to acquire SSM`s assets relating to mining activities at
Everest for an amount of approximately ZAR 34 million. AQPSA will also assume
the responsibility for the financial leases of the mobile mining equipment at
Everest.
Very importantly AQPSA will also invite all SSM`s employees to apply for
employment within the group and significant progress in establishing contact
with employees and reassuring them of job security has already occurred.
Despite the contractual process for dealing with contract breech, AQPSA has
decided for the purpose of expediency and in the interests of SSM`s employees
and the need to retain skills in a remote part of the country that prompt
termination of this business relationship is in its best interests. The
alternative would have seen AQPSA and SSM run a legal separation process where
the business costs to AQPSA might far outweigh any possible recoveries from SSM.
While it is anticipated that partial production will commence on Monday 28
January 2008, it is expected that the recruitment process to fill the labour
compliment will continue until the end of February 2008. Consequently, as a
result of the dismissal and shut down of operations, production losses are to
date estimated to be 12,000 PGM (4E) ounces, and until operations are back to
normal it is not possible to quantify the total lost production at AQPSA.
AQPSA has already engaged additional external resources in the fields of human
resources, payroll administration and operational management to prepare for the
hiring, induction and retraining of ex SSM employees wishing to join the
Aquarius stable.
The processing operations will continue to be managed by contractor Minopex
(Pty) Ltd.
AQPSA believes that the long-term outlook for production and earnings at Everest
remain excellent as the operation continue to ramp production to a targeted
215,000 PGM (4E) ounces per annum.
For further information please contact:
In Australia:
Willi Boehm
Aquarius Platinum Corporate Services
+61 8 9367 5211
In the United Kingdom and South Africa:
Nick Bias
Aquarius Platinum
+ 44 7887 920 530
Date: 25/01/2008 10:01:13 Produced by the JSE SENS Department.
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