| Mon 15 Dec 2008, 8:52 | | AQP - Aquarius Platinum - Business Interruption at Everest Platinum Mine |
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AQP
AQP
AQP - Aquarius Platinum - Business Interruption at Everest Platinum Mine
Aquarius Platinum Limited
(Incorporated in Bermuda)
Registration Number: EC26290
Share Code JSE: AQP & ISIN Code: BMG0440M1284
("Aquarius Platinum")
15 December 2008
Business Interruption at Everest Platinum Mine
Aquarius Platinum Limited wishes to update shareholders on the situation at
the company`s Everest Platinum Mine. As previously announced, operations at
the mine were suspended from night shift on Sunday 7 December after
instability was detected in the upper areas of the mine. The instability was
subsequently found to be a result of subsidence that has occurred over an
upper area of the mine with the area affected by subsidence limited to a
mined out area of the orebody which includes the upper levels of the decline
shaft. Following a comprehensive assessment of the options available to mine
management, and primarily focussing on the future safety of the mine and its
personnel, the decision has been made to suspend operations for a minimum of
six months. This is considered a prudent time frame that will permit
assessment of the best way forward for the long-term.
Commenting on this decision, Stuart Murray, CEO of Aquarius Platinum said:
"Our decision to suspend operations is most regrettable, however it is the
right one because it will allow us the time we need to ensure that Everest is
brought back into production in the safest manner for the long-term, rather
than rushing into a short-term high-risk decline rehabilitation project. The
suspension of operations also places the least strain on the South African
business as a whole at a time of low platinum group metals prices."
Subsidence
The instability is found to be a result of subsidence across the upper
decline area and a contributing factor may have been the exceptionally high
rainfall preceding the event, with a third of typical annual rainfall,
occurring in one day on 23 November. Pro-active monitoring measures gave
early warning of the event and decisive action by mine management ensured
that no personnel were injured. The subsidence has continued during the
course of the last week.
Management has continued to assess the situation in conjunction with the
South African Department of Minerals and Energy (DME) and a Section 54 notice
in terms of the Mines Health and Safety Act is in force prohibiting normal
mining operations but allowing inspection teams to enter the mine and
permitting the resumption of pumping operations.
Specialist inspection teams including Proto Members (Mine Rescue Services
Team) were able to access the underground workings and determine the extent
of the subsidence area by observing where pillar scaling was visible on the
periphery of the area. Although the rate of subsidence had decreased by the
weekend of 14 December, as evidenced by a significant reduction in settlement
noise, it cannot be quantified when the area will finally settle. It is
therefore uncertain when the area can be safely accessed to perform detailed
assessments and commence with remedial activities. The vertical extent of the
subsidence as calculated by surface measurements is currently estimated at a
maximum of 15 centimetres.
The affected area is limited to mined-out areas across the upper part of the
decline. Rock engineering specialists have confirmed that the subsidence will
not propagate beyond this area and that it is constrained by geological
features on the north and south and by the regional pillars to the north-
west.
The subsidence resulted in pillar damage in the affected area, making the
area unsafe, thereby preventing use of the decline system. Even though the
subsidence did not affect any of the working faces, the decline access and
decline belt system cannot be utilised, preventing any resumption of normal
mining activities. Based on the current damage assessment and with input
from an independent rock engineering expert any short-term attempt to resume
production through rehabilitation of the decline would pose a significant
safety-risk to employees.
Business Interruption
This business interruption due to subsidence is a significant event, and in
assessing the lowest-risk way forward in terms of safety and operating
cashflow impact, the decision has been made to suspend operations for a
minimum of six months. This time will allow for a detailed technical
investigation and the determination of alternatives to re-establish access
and beltways into the underground workings after which Everest can to be
returned to production in a safe manner. One possibility includes two
alternate decline positions that could be developed from the previous
opencast areas, each offering a technically acceptable access route. It
should therefore be emphasised that the subsidence event does not jeopardise
the sustainability of Everest on a long-term basis.
Retrenchments
Regrettably this decision also means that the majority of the workforce
(approximately 1,950 people) will be retrenched. To this extent the process
of consultation with the workforce and the unions has already commenced.
Some limited opportunities exist for the redeployment of personnel to other
AQPSA operations and a small team will be maintained at Everest. Existing
consumables and stores stocks at Everest will be used at Kroondal and
Marikana.
Insurance
An insurance claim is in preparation based on the subsidence event. AQPSA
believes that there is sufficient ground for a combination of claims for
subsidence, loss of earnings, clearance costs, and that the potential
insurance cover will off-set a large part of the business interruption.
Production Update for October and November 2008
Until this event at Everest, the second quarter for the 2009 financial year
to December 2008 had promised to be a continuation of the improvements
reported in the first quarter at all the AQPSA operations. For the two months
to November 2008, Kroondal, Marikana and Everest all experienced increases in
production and decreases in cash costs, helping to offset further declines in
operating margins due to current platinum group metals prices. Based on the
actual production for October and November 2008 and an estimate for December
2008, both Kroondal and Marikana will show an increase of approximately 6% in
PGM production and a reduction of approximately 8% in on-mine unit costs.
For further information please contact:
Nick Bias
nickbias@aquariusplatinum.com
+ 41 (0)79 888 1642
Charmane Russell
charmane@rair.co.za
+27 (0)11 880 3924
+27 (0)82 372 5816
Date: 15/12/2008 08:52:21 Produced by the JSE SENS Department.
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